Reliance Defends Its KG-D6 Deal after Being Blamed For ‘Gold Plating’
It seems that the allegation of “gold plating” on Reliance Industries over its KG-D6 gas field had once again sparked the long running controversy surrounding the malicious smear campaign being done by private lobbyists.
While the Company maintained its defense strong against the reports submitted by the top auditor CAG, the government seems to be closely monitoring the turn of events.
As per reports, in 2004, Reliance had proposed a USD 2.4 billion investment for producing 40 million cubic metres per day of gas from 5.32 trillion cubic feet of reserves in the D1/D3 fields of the KG-D6 block, which in 2006, was revised with the capital expenditure requirement to USD 5.2 billion in Phase-I for producing a higher 80 mmscmd of gas from 11.3 tcf of reserves.
The CAG audit report had claimed that this would curtail government’s profit, which has been refused by the Company. Referring to the new Exploration Licencing Policy, the Company claimed that extending capital cost of the project would never benefit the operator.
Nevertheless, the CAG report never mentioned that Reliance indulged in ‘gold-plating’ and further Reliance stated: “CAG does not state that any evidence exists to support any case that the contract cost has been dishonestly inflated”.
The Company is of the opinion that CAG audit fails to notice that there is no correlation between inflating capital investment and profits for the operator.
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