CAG indictment of RIL finds echo in CBI probe against oil regulator

The draft CAG report,submitted to the Petroleum Ministry last week,holds the Directorate General of Hydrocarbons responsible for approving “the Addendum to Initial Development Plan (of $5.197 billion) without questioning why the operator (RIL) did not take action in line with the already approved IDP (of $2.39 billion)”.

Despite several calls and a text message sent to Sibal,he did not respond.

RIL had first quoted $2.39 billion as “initial” development cost in 2004 for producing gas from its D1 and D3 fields in KG-D6,but revised the capital expenditure to $8.8 billion through an “addendum” to the Initial Development Plan that was approved in December 2006 when Sibal headed the DGH.

The CAG report says the cost increase was likely to have “significant adverse impact on Government of India’s financial take” but said it was unable to comment on the rationality of the cost increase as they could only be ascertained in future audits of records from 2008-09 onwards.

“The role of DGH and Government representatives on the Management Committee may be closely scrutinised to see why the operator was allowed to violate the provisions of the production sharing contract (PSC) and not adhere strictly to the terms of the approved ‘IDP’,” suggests the CAG report.

The IDP,it says,was “not in conformity” with provisions in the production sharing contract which directs a block operator to submit a “comprehensive” plan characterising the reservoir,indicating its reserves,the required number of wells to be drilled,and possible output and production rate with cost estimates clearly specified.

Sibal finds direct mention in the CAG report for allowing RIL to retain the entire area of block KG-DWN-98/3 (which holds the KG D6 discovery) even though the PSC outlines that the operator relinquish 25 percent of the area each time after phase 1 and phase 2 of the exploration.

“Arguments put forward by Sibal at various points of time that there was hydrocarbon bearing channels throughout the block area and that consequently the whole block should be declared as contract area are specious,irregular and unacceptable in the absence of drilling of wells,and resulting hydrocarbon discoveries,” says the CAG.

“The undue benefit granted to the contractor through this irregular and incorrect decision is huge,but cannot be quantified,” says the CAG.

CBI officials said that they would be using the CAG report to correlate with their findings.

“We have again asked for a copy of the draft CAG report,” they said. The CBI’s first request to the oil ministry — whose officials are also implicated in the CBI enquiry — for a copy of the report was in September last year.

It reiterated its request on February 3 this year for “early submission of information/documents”.

The CBI’s preliminary enquiry has alleged that in lieu of undue favours shown to RIL,Sibal availed of various services including accommodation for his two daughters for more than four months at RIL’s guest house in Dalal House in Mumbai.

“A PE is registered against VK Sibal,unknown officials of the Petroleum Ministry and unknown others for gross misconduct committed by them,” says the PE dated November 26,2009.

A preliminary enquiry is filed after checking the veracity of a complaint. The CBI then gathers tangible proof to file an FIR,or recommends case closure if it does not find any incriminating evidence.