New Delhi,nov.29 : The federal auditor has raised a red flag over allowing Reliance Industries Ltd to recover $970 million of the investment it has made in theKG-D6 Oil and gas block off the Andhra coast, senior audit officials said.
In its latest audit report on the performance of the government’s production sharing contracts with private operators, the comptroller and auditor general has observed that Reliance has recovered $9.2 billion out of the $10.44 billion invested in the field till March 2013.
TOI had first reported the impending CAG move to not allow Reliance recovery of $160 million on three appraisal wells dug without sanction; raising expenditure by $427 million by continuing exploration work in discovery area beyond permissible time; exceeding estimates on equipment and infrastructure by $523 million and unauthorized payment to a vendor of 200 euros ($272 million).
The final report, tabled in Parliament on Friday, has suggested raising audit exceptions on mainly three grounds: expenditure-related issue for $386.83 million, revenue issues for $250.93 million and accounting issues for $52.94 million. Besides, CAG has put red flags on two major chunks of investments of $118.90 million and $160.81 million.
“There are obvious differences between the CAG and RIL on certain basic issues concerning the production sharing contract. Once we receive a formal communication of audit exceptions by the government, we will respond to the government in accordance with the provisions of the accounting procedure under the PSC and also exercise such other rights as are available to us in law,” the company said in a statement.
This is the second audit of the KG-D6 field, which is easily the biggest in terms of size of investment and the output projected initially. The latest CAG report is bound to set off another round of tug-of-war between India’s biggest private oil company and its partners – BP and Canada’s Niko – and the oil ministry.
The ministry has slapped a total penalty of $2.37 billion, or about Rs 14,200 crore, on the company for failure to meet output target in the four financial years beginning April 1, 2010.