OilMin to reply to CAG report in two weeks

The Ministry of Petroleum and Natural Gas will respond in two weeks to Comptroller and Auditor General (CAG)’s draft report, which has alleged that the ministry and its upstream regulatory arm, the Directorate General of Hydrocarbons, violated rules to favour at least three private companies.

CAG agreed to carry out special audit in respect of certain blocks/fields operated under pre-NELP (New Exploration Licensing Policy) and NELP regimes at the ministry’s request in November 2007.

“We have to give reply in two weeks,” a top ministry official said. The petroleum ministry in a statement issued later in the day said, “The draft performance audit report has been received on June 8. The ministry is examining the draft report. It will prepare a reply to the audit observations after obtaining details from relevant agencies and send it to the Office of the Principal Director of Audit (in CAG) for further necessary action at their end.”

The three companies — Reliance Industries, Cairn India and BP Group PLC — that have been named in the draft report will also reply in a fortnight, after which the CAG will draw up a final report.

“Companies concerned, accused of so many things, will also reply,” the oil ministry official said. “Then in the light of these views, CAG will finalise the report.”

The CAG draft report, which is awaiting petroleum ministry’s comments, has said the ministry and DGH bent rules by allowing Reliance Industries to inflate capital expenditure by 117 per cent on developing its D1 and D3 fields in the Krishna-Godavari basin off India's east coast.

A Reliance spokesperson said the company had not received a copy of the aforesaid report and hence was unable to comment on specific issues. “Reliance Industries strongly affirms that as a responsible Operator, it has fully complied with the requirements in the PSC at all times in conducting petroleum operations, and refutes any suggestion to the contrary,” the spokesperson said in a statement.

The ministry and DGH are also alleged to have favoured Cairn India and a trilateral joint venture between Reliance Industries, BG Group Plc and state-owned ONGC that operates the Panna-Mukta and Tapti group of gas fields.

The official said the petroleum ministry officials would consider available facts to reply to the CAG draft report following which the auditor would prepare the final report.