Consider replies by Reliance, Oil Min tells CAG

The Petroleum Ministry has asked the Comptroller and Auditor General (CAG) to consider the replies to its draft audit observations on Reliance Industries' KG-D6 gas fields before finalising the report.

"The draft audit observations received from the CAG have been replied by the ministry on July 8, 2011, along with the relevant comments received from contractor (Reliance) in respect of KG-DWN-98/3 (or KG-D6) block," Minister of State for Petroleum and Natural Gas R P N Singh told the Rajya Sabha.

In a written reply to questions raised in the House on the allegation in the CAG draft report that the Oil Ministry favoured Reliance, Singh said: "This ministry has submitted a reply to the draft audit report and an exit conference has also been held with office of the CAG."

"CAG has been requested to consider these replies before finalising the audit report," he added.

The top auditor, in its draft report, said the Oil Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), bent the rules to allow Reliance to retain the entire 7,645-sq km KG-D6 block in the Krishna-Godavari Basin, off the East Coast.

Also, the capex plan Reliance submitted for Dhirubhai-1 and 3, two of the 18 gas discoveries in the KG-D6 block, was not in compliance with the Production Sharing Contract and the ministry and the DGH turned a blind eye to the company raising capital expenditure without having begun work on the previous plan.

"As the report in question is still in the draft stage and may undergo modifications, no comments can be made on the contents of the CAG report at this stage," Singh said, adding that the CAG is yet to submit the final report to Parliament.

In all, four questions were raised on the draft CAG report.

In reply to one of them, he said the Office of the Principal Director of Audit (ESM) has informed that "the CAG's draft report is based on the documents made available by the Ministry of Petroleum and Natural Gas, Directorate General of Hydrocarbons (DGH) and the scrutiny of the records/documents of the operators."

"It has further been informed that CAG also takes into account the response/comments furnished by MoPNG, DGH and the operators," he added.