Govt won’t approve KG budget, Reliance sulks

With Reliance Industries and its partner BP Plc warning of further drop in KG-D6 gas output in absence of investments approvals, the oil ministry hit back on Tuesday, saying it had not approved annual spending because the Mukesh Ambani firm had denied the Comptroller and Auditor General (CAG) access to its books.

The executive director of RIL P M S Prasad and the BP India head Sashi Mukundan met the oil minister S Jaipal Reddy for nearly three and half hours on Friday to highlight the exigency facing the flagging KG-D6 fields due to his ministry not approving annual budgets and capital spending for three years, sources said.

An oil ministry statement said that CAG, which is carrying out audit of spending on KG-D6 block from 2009-10 to 2011-12, had 'recommended withholding of sanction for annual work plans and budgets if access to records is denied to CAG'. CAG had submitted audit of KG-D6 for 2006-07 to 2008-09 to Parliament in September last year and RIL's 'denial of access to records to the CAG was adversely commented upon in the previous audit statement'.

While the CAG audit report was submitted in September last year, sources said the oil ministry-controlled block oversight committee has not approved budgets and work programme for 2010-11, 2011-12 and 2012-13. The Management Committee (MC), which is headed by the Directorate General of Hydrocarbons (DGH) and includes a senior official of the oil ministry, is to approve spending before beginning of a fiscal.

The oil ministry sources said that RIL was denying CAG access to all its records for subsequent audit as it had disputed the scope of audit. RIL says that CAG cannot do a performance audit.

'The representatives of RIL and BP met Reddy on July 13 and represented for speedy clearances in four of the blocks – NEC25 in Mahanadi Basin, KG-D6 and two in Cauvery basin,' the statement said.

RIL-BP said at the meeting that output at KG-D6 will continue to fall in absence of interventions. KG-D6 output this week has dropped to below 30 million standard cubic metres per day (mmscmd) and is projected to further fall to 20 mmscmd by next year.
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