More than three months after the Parliament’s Public Accounts Committee (PAC) decided to scrutinise the findings of the Comptroller and Auditor General (CAG) on the KG-D6 gas block, the committee has summoned at least seven executives of Reliance Industries Limited (RIL) to give oral evidence, this Friday, on hydrocarbon production-sharing contracts.
Since the controversial report was sent to the PAC, this is the first time any RIL member would appear before the committee as a witness and answer questions raised by parliamentarians.
“We have been raising some questions about the deal and had also sent questions to members of the petroleum ministry. We have not been given the names of the executives yet,” said a senior PAC member.
The CAG had attacked the petroleum ministry and the country's largest company, RIL, for violations in the production sharing contract governing Reliance's crown jewel, the KG-D6 block. The government auditor had recommended revisiting the profit-sharing formula. It had accused RIL of hoarding the exploration acreage and said, “RIL was allowed (by the director general of hydrocarbons) to enter the second and third exploration phases, without relinquishing 25 per cent each of the total contract area at the end of Phase-I and Phase-II in June 2004 and 2005, respectively, against Articles 4.1 and 4.2 of the PSC (production-sharing contract) by treating the entire contract area as a discovery area. Subsequently, in February 2009, the government also conveyed the approval to treat the entire contract area of 7,645 sq km as a discovery area, thus enabling the operator to completely avoid relinquishment of the area.”
During the last PAC meeting on the KG-D6 block on November 17, parliamentarians were upset with petroleum secretary G C Chaturvedi and the director general of hydrocarbons, S K Srivastava, and accused them of appearing before the committee without proper preparation. PAC chairman Murli Manohar Joshi was particularly upset with the two senior bureaucrats who were unable to reply to questions raised by the members. Subsequently, the ministry of petroleum and natural gas had sent a detailed reply to the PAC queries on the issues raised by the members.
The CAG has also said RIL's opinion that petroleum was present in the entire contract area was baseless, and the director general of hydrocarbons should have forced the contractor to relinquish the stipulated area. The CAG recommended that the ministry review the determination of the entire contract area of the KG block, while strictly complying with the production-sharing contract. RIL, however, defended itself, saying as a contractor, it remained “committed to complying with the production-sharing contract provisions and procedures, including adopting good international petroleum industry practices.