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| More heat from Anil on his brother's KG gas cost |
| BS Reporter / Mumbai Aug 06, 2009, 00:34 IST |
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Anil Ambani’s Reliance Natural Resources (RNRL) today alleged that a conflict of interest wasn’t taken into account in nominating the two independent experts who evaluated and validated the capital cost of the Krishna-Godavari gas fields of estranged brother Mukesh Ambani’s Reliance Industries (RIL).
The two independent evaluators were P Gopalakrishnan and global consultancy firm, Mustang Engineering. RIL’s approved capital expenditure for the field is Rs 45,000 crore.
 Reacting to the denial on Tuesday by the Directorate General of Hydrocarbons (DGH) of any favouring of RIL, the chief executive of Reliance Power, J P Chalasani, alleged the two independent experts had also been advising RIL in various projects and their evaluation wouldn’t be independent.
“Gopalakrishnan serves the School of Petroleum Technology. Mukesh Ambani is its first president and chairman of its board of governors,” Chalasani said. “Does he have a conflict of interest? Was it disclosed at that point of time? If it was disclosed, the petroleum ministry and the regulator would have taken a different view of engaging him for validation,” Chalasani told a press conference here.
In the case of Mustang Engineering, Chalasani said it was part of the UK-based John Wood Plc, which Reliance Industries had proposed to buy in 2006. “This agency was asked to evaluate and make field development plans, along with estimating the cost. Mustang has also been advising Reliance Industries on various other projects,” he added.
This is the latest development in the public spat between RIL and RNRL over the KG basin’s D6 gas field, discovered and developed by RIL. On Tuesday, the DGH had defended the $8.8-billion capex plan of RIL for the KG-D6 field and reiterated the importance of the production sharing contract (PSC).
Chalasani also attacked the DGH's validation of RIL's capital cost and said the Comptroller and Auditor General's report on RIL's capital cost must be made public.
“The capital cost is up almost four times, while the gas production has just doubled. Doubling the production to 80 mmscmd doesn’t mean the capex doubles,” he said, as economies of scale have to be factored in.
“As a result of higher capital expenditure, the government’s share gets reduced and the government’s share gets delayed. The government could lose Rs 30,000 crore due to RIL’s inflated capital expenditure,” he added.
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