RIL strongly rebuts CAG allegations on KG-D6 ‘fudging’
10 Sep 2011
Reliance Industries Ltd on Friday strongly rebutted the Comptroller & Auditor General's (CAG) report accusing it of inflating costs for its offshore Krishna-Godavari D6 gas block and not following the production-sharing contract with the government.
In its report tabled in Parliament on Thursday, CAG also alleged that RIL has an incentive to keep costs high because this would reduce the share of profit it has to pay the government.
RIL says its response to the auditor's charges is endorsed by top global consultants and UK-based partner BP, whose expertise will help maximise output from its oil and gas assets, including the D-6 block.
The comptroller and auditor general's report has accused the oil ministry of laxity in enforcing the PSC for in the D-6 block, India's biggest gas field so far.
The final CAG report was a diluted version of the stinging draft report leaked to the media earlier, which had alleged serious irregularities and overstatement of costs. This scared investors and pulled down the company's shares to a 52-week low.
"The independent reports by Ernest & Young, IPA and Daniel Johnston & Co. entirely validate RIL's stand in its responses to CAG. The independent nature of these studies conducted by globally reputed consultants has acknowledged RIL's commendable efforts in bringing to stream India's first deep water hydrocarbons production facility in record time," RIL said in a statement.