RNRL wants CAG audit of RIL gas fields made public
Press Trust of India / New Delhi Aug 04, 2009, 20:33 IST
Expressing surprise over oil field regulator DGH's observation that inflation of capital expenditure would not benefit Reliance Industries (RIL), Anil Ambani Group firm Reliance Natural Resources (RNRL) demanded that the CAG audit of the RIL-owned fields be made public for the sake of transparency.
Commenting on DGH's statement that Production Sharing Contract provides for auditing of the actual expenditure by three sets of auditors - the management committee appointed auditors, government-appointed auditors and by Comptroller and Auditor General of India (CAG), RNRL said RIL stands to directly benefit from inflating field development cost.
"In the interests of transparency, and to set the matter at rest, DGH should publicly disclose the full reports of CAG, Indian experts, international engineering consultants, and independent auditors," RNRL spokesperson said in a statement.
Expressing surprise at the DGH comments that inflating the capex does not benefit RIL, it said as per the Production Sharing Contract, RIL is entitled to first recover its entire capital expenditure, before the Government gets any share.
"RIL has substantial motivation to claim higher capex. Simply put, the more RIL claims to have spent on capital expenditure the less the government gets as its share from the revenues, and more delayed is the timing when the government gets its revenues," the spokesperson said.
On DGH's assertion that two independent experts had validated RIL cost, RNRL said: "One of the experts appointed by DGH, P Gopalakrishnan, by his own admission in his report, has not even studied the Production Sharing Contract (PSC) between govt and the contractor."
It, however, did not make any comment on validation of the cost by international engineering consultant Mustang International and DGH pointing to the Goldman Sachs Report on Global Finding and Development Costs 2008 that puts RIL's KG-D6 fields among the lowest in cost out of 32 deep water projects developed in the world.
RNRL said DGH's comments on the role of the Management Committee glosses over the fact that the four member committee has equal representation from the government of India and RIL - "the conflict of interest is obvious".
It said contrary to DGH's statement that "today, India is a favored destination for companies to invest in E&P business", the fact is about 70 per cent of India's acreage under all NELPs is held by two domestic companies, of which RIL alone holds 35 per cent.
"DGH's comments on an 'obsessive and endless public debate' were best avoided, as all comments are being made in the interests of enhancing Government's revenues by potentially up to Rs 30,000 crore," the statement added.
It looks silly and childish on both brothers to quarrel in streets rather than settling the matter amicably. Hey Bros you both are Wharton educated, I believe. Show some professionalism.
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