Reliance Industries Recovered $1.6 Billion In Excess Costs, Says CAG
CAG has tabled in the parliament the audit report of the gas recovered from the KG D6 gas block. The report has thrown light on many discrepancies and irregularities in the cost and recovery of the gas from the KG basin.
Here are some of the findings from the report:
1. Migration of Gas: Gas has been migrated from the blocks owned by the state-owned firm (ONGC) to the private company operated fields (Reliance). The government has reportedly appointed a one-member committee under Justice AP Shah to advice on the future course of action.
2. Cost recovery: As per the agreement, profit sharing with government starts after the private players have recovered their costs. The CAG has noted that this clause has enabled private players to inflate and delay operational cost. The report noted “The total financial impact of excess cost recovery during 2012-14 on account of the earlier identified audit findings was USD 1.547 billion (Rs 9,307.22 crore). For the period 2012-14, additional issues of excess cost recovery claimed by the operator (RIL) were noticed, financial effect of which was USD 46.35 million,”
Among the other things the CAG has rapped the Oil Ministry and its technical arm DGH for not exercising enough control and vigil over KG-D6 block, leading to excess cost recovery.