The management committee (MC) of Reliance-operated D6 block, which is headed by the director general of hydrocarbons, has approved only $3.99 billion cost recovery against Reliance Industries’ claim of $9.47 billion, oil minister Jaipal Reddy said.
“For this PSC (production sharing contract of D6 block), while contractor has claimed an expenditure of $9.47 billion and cost recovered $5.26 billion up to 2010-11, the MC has approved only $3.99 billion upto financial year 2007-08,” he told the Rajya Sabha on Tuesday.
According to annual audited account of the D6 block upto March 2011, the expenditure incurred by the contractor for development activities in D1 and D3 gas fields and MA oil field is about $5.7 billion and $1.73 billion, respectively, he said in a statement.
“The said audited accounts are placed before MC for adopting the same as provided under the PSC. MC has approved the said audited accounts up to year 2007-08,” he said. ET wrote it first on Feb 8, that MC did not approve annual accounts of D6 block, submitted by RIL for 2008-09, 2009-10 and 2010-11. The contract allows RIL to first recover its entire expenditure in developing oil and gas fields from block’s sale proceeds before determining profit shares of stakeholders.
Reddy said the contract provided for multiple auditing of expenditure or cost recovery, firstly by the MC appointed auditors and then by government-appointed auditors. “The auditors appointed by government of India audited up to 2006-07,” he said.
The Comptroller & Auditor General of India(C&AG) had conducted special audits for 2006-07 and 2007-08 and it “has also agreed to conduct regular audit for the block as per PSC for the year 2008-09,” he said.
The C&AG report had observed that the large procurement contracts were given on single bid basis, he said. “However, C&AG has not quantified any loss of revenue to government in this block for the audited years. The report of C&AG is under consideration of public accounts committee (PAC),” he said.