Reliance seeks adequate time to respond to CAG report

Reliance Industries has sought "suitable opportunity" to respond to a CAG report that indicts it on receiving undue favours from the oil ministry, saying the official auditor had not discussed many of the findings mentioned in the draft report.

Reliance Executive Director P M S Prasad on June 29 wrote to Oil Secretary G C Chaturvedi protesting that his firm has not received the full copy of the draft CAG report and was never consulted on many issues pointed in the reports.

"...The subject matter of many of the observations being reported does not seem to have constituted the substance of any of the audit memos we had received from the CAG team during the audit of KG-DWN-98/3 (or KG-D6) block at our premises between December 2009 to September 2010.

"Needless to say neither were any of these issues raised by CAG during our brief conference with the CAG team on June 4," he said in the letter.

A spokesperson of CAG could not be reached for comments.

CAG's June 7 draft report said the oil ministry and its technical arm, the Directorate General of Hydrocarbons, favoured Reliance by turning a blind eye to the Mukesh Ambani firm increasing capital expenditure on its flagship KG-D6 gas fields and allowed it to retain entire exploration acreage in violation of the Production Sharing Contracts (PSCs).

"All observations that are of material consequence to us as a contractor, and affect our rights as well as obligations under the PSC, need to be responded to by us in the interest of fair play and natural justice, particularly in relation to those observations in respect of which no memo was received by us during audit, seeking our comments," Prasad wrote.

Oil Ministry too had in a June 22 letter to CAG raised the issue of CAG not seeking comments from private firms like Reliance and Cairn India before before levying a series of allegations.

"In the interactive meeting (CAG had with firms before submitting the draft report) one of the operators gave a presentation on how the project was executed and no audit observations were discussed. In the other meeting, only one observation was discussed with the operator," it wrote.

"The operators were not given any draft report before this meeting so that they could have come prepared with some reply," the ministry wrote.

Prasad in the June 29 letter stressed that the process of giving contractors an opportunity to respond to any audit objection before preparation of the draft report was not followed.