RIL writes to Murli Manohar Joshi on CAG report

Mukesh Ambani-run RIL in a letter to Public Accounts Committee (PAC) Chairman Murli Manohar Joshi has said CAG did not consider its response in the report that criticised the company for violation of contract for showpiece KG-D6 block.

CAG did not give us an opportunity and access to look into its comments on the draft report and finally the CAG did not consider and include the company's repines, Reliance Industries (RIL) Group President V Balasubramanian said in the letter. CAG ignored the operational and technical facts and data as well, he added.

CAG in its report had stated that the contract was violated by RIL was allowed to retain the entire 7,645 sq km of its KG-DWN-98/3 (KG-D6) block in the Bay of Bengal after the giant Dhirubhai-1 and 3 gas finds were made in 2001.

PAC is examining the CAG report.

Attaching a six-page detailed note on the CAG report, RIL in its letter dated September 26 stated that CAG was "short-sighted" in criticising the company for non-relinquishment of the area and declaring the entire area as discovery area.

"... The retention of the area is strictly as per the Production Sharing Contract (PSC) and in line with the geological knowledge of the book," it said.

RIL said no material relating to operational and technical matters relating to the KG-D6 block was sought from the company even though the CAG report has commented on them.

Stating that it was not given access to the full draft report of CAG for comments, the company said extracts that were previously held were only provided after the official auditor held the so-called 'Exit Conference' on July 12 to conclude the audit.

RIL was given just a week to respond and the company "did its best to send as complete a response given the time allotted".

"Unfortunately, the CAG refused to consider any response submitted by RIL after the Exit Conference. Therefore, the fact is that CAG, for reasons best known to it, chose to ignore operational and technical fasts and data," it wrote.

On non-relinquishment of block, RIL said: "Retention of discovery area is a geological issue and not an accounting issue. As such it is best settled by technical experts, which was also done in this case. CAG made no attempt to or even gave RIL the opportunity to explain how in geological terms the entire block did quality to be declared a Discovery Area as per the PSC."

"Retaining acreage as Discovery Area in effect entails no benefit to the contractor," it said adding RIL is willing to make a presentation to the CAG on the issues brought out by CAG.