Letter dated August 12, 2009

Visakhapatnam
August 12, 2009

Regd. Post/ Ack. Due

E.A.S.Sarma                                                                         
14-40-4/1 Gokhale Road     
Maharanipeta                                    
Visakhapatnam 530002
Tel. Nos. 0891-6619858/ 9866021646

To

Dr. Manmohan Singh
Prime Minister

Dear Dr. Manmohan Singh,

This is in continuation of my letter of August 3, 2009 on the concerns that have emerged on the pricing of natural gas from the fields licensed to RIL in the K.G. Basin. In view of the public interest implications, I wish to bring to your attention the additional concerns that have arisen.

I understand that the government has requested the Comptroller & Auditor General (CAG) to audit the financial aspects of implementation of the Production Sharing Contract (PSC) in the instant case. It is a step in the right direction, provided the Ministry of Petroleum & Natural Gas (MOP&NG) and the other government departments extend their full cooperation to the high office of CAG.

The Director General of Hydrocarbons (DGH) has issued a statement through his website to give the impression that the capital expenditure details reported to have been incurred by RIL have since been audited by CAG, whereas CAG’s clarification on 11-8-09 (reported in local edition of The Hindu of 12-8-09) contradicts this by saying that any claim that such capital expenditure has been audited by CAG would “not be true to facts”. This casts serious doubts on the credibility of the agencies acting on behalf of MOP&NG. Instead of making a public disclosure of the technical and financial information on all PSCs under Section 4 of the RTI Act, it looks as though MOP&NG is trying to obfuscate the real issues to the detriment of the public interest. I doubt whether MOP&NG has taken the Parliament into full confidence on such an important matter as this!

The case of NTPC in this RIL affair is important. NTPC should be allowed sufficient autonomy to safeguard its own commercial interests and the interests of its own consumers. Notwithstanding the statements made by the Minister in charge of MOP&NG, I hope that the government will desist from any attempt to gag NTPC’s voice.

Anticipating the hurdles in the way of full disclosure, I had written a letter to CAG on 9-8-09 with a view to help that office to get at the kind of documentation that is relevant. I enclose a copy of that letter for your information.

Articles 149 & 151 of the Constitution of India require the CAG to audit the accounts of the Union and the States and submit the audit reports to the Parliament. I hope that the Cabinet Secretariat and MOP&NG will submit all the relevant record to CAG to facilitate a proper and meaningful audit of this deal.  

The issues involved in these PSCs, especially the PSC signed with RIL, are such that they will significantly impact the finances of the Central government and affect the interests of the tax-payers and the consumers of natural gas. Your office has therefore a special responsibility to ensure transparency and accountability in this matter and take such decisions that will subserve the public interest.

I am afraid that MOP&NG has not fully prepared itself for the new round of auctions in NELP VIII. I enclose a copy of my letter dated 8-8-09 addressed to Secretary, MOP&NG on this subject. If the Ministry goes ahead with NELP VII without addressing the kind of concerns raised by me, the government will, no doubt, get itself into a situation as sticky as in the instant case.

Regards,

Yours sincerely

E.A.S.Sarma
Former Secretary to GOI