Government favoured RIL, others in gas exploration contract: CAG
13 Jun 2011
The government has favoured private sector oil explorers, including the Mukesh Ambani-led Reliance Industries Ltd, at a huge cost to the exchequer, the Comptroller and Auditor General (CAG) has said in a report.
In its first-ever audit of oil companies, the CAG said the petroleum ministry also overlooked contractual stipulations and allowed Reliance Industries to overstate the cost of developing the Krishna Godavari basin-D6 gas fields off the Andhra Pradesh coast.
According to the CAG report, two other firms - Cairn India and BG - also received favours from the petroleum ministry and the oil sector regulator directorate of hydrocarbons.
CAG said the cost estimate of developing the gas fields was "gold plated" by the private sector exploration companies and that it was awaiting the petroleum ministry's comments.
The inflated cost estimates ensured that RIL could recover its capital through sale of gas much before the investments were actually made on developing the gas field.
The CAG will present the final report to Parliament after receiving comments from the oil ministry.
