Government favoured private oil explorers: CAG draft report

Written by: Biswajeet Panda
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New Delhi, Jun 13: There seems to be no end to the plight of UPA-II government. After a series of scams and corruption scandals involving various ministers came to the light, there is yet another serious allegation against the oil ministry and its regulatory arm.

The Comptroller and Auditor General of India has said that the oil ministry and its regulatory arm for oil hunting companies, Directorate General of Hydrocarbons, showed undue favour to at least three private explorers.

The draft report, awaiting comments by the oil ministry said that Mukesh Ambani owned Reliance Industries Limited (RIL) was allowed to violate terms of the contract with the government for Andhra offshore fields.

The Andhra Pradesh offshore fields, is India's biggest gas discovery in recent years and the CAG draft report states that the ministry allowed RIL to increase its capital expenditure plan to start production from there.

The report said, "The undue benefit granted to the contractor (RIL) is huge, but cannot be quantified."

It added, "The intent of the operator (Reliance) right at the outset, to submit revisions and changes to the development plan was evident all through from the submission of an initial development plan (IDP) rather than a comprehensive plan."

And said, "The increase in cost… is likely to have significant adverse impact on the GoI's financial take."

The CAG report was also at a loss to ascertain the high-value procurement activities by RIL involving huge payments and cited numerous instances where it failed to verify the "reasonableness of costs incurred" by RIL.

It also admitted that all this was largely due to the lack of adequate competition, including single financial bids, with major revisions in scope and specifications.

The CAG report observed, "(all this led to)adverse implication for cost recovery and GoI's financial stake."

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