Respond to CAG Report on KG Gas Basin, SC Tells RIL

Published: 17th January 2015 05:57 AM  |   Last Updated: 17th January 2015 05:57 AM   |  A+A-

NEW DELHI: The Supreme Court on Friday granted six weeks time to Mukesh Ambani’s Reliance Industries Ltd (RIL) to respond to the CAG report, which found alleged irregularities including payments made to the contractors on the drilling of D6 wells at the Krishna-Godavari basin.

The court slated the next hearing for March 20, during which it would examine the RIL’s response to the CAG report that had sought disallowance of about `2,179 crore expenditure that the RIL had incurred.

Solicitor General Ranjit Kumar said the Centre would  clear its stand once examining of the CAG report.

The order was passed during a brief hearing of petitions filed in 2013 by senior CPI leader Gurudas Dasgupta and NGO Common Cause, challenging the then UPA government’s decision to double the price of natural gas from US $4.2 to $8.4 per mmbtu, and seeking cancellation of RIL’s contract for exploration of oil and gas from the KG basin.

The third PIL on the issue has been filed by advocate M L Sharma.

A Bench headed by Justice T S Thakur also allowed Dasgupta and other petitioners to file their response to the NDA Government’s fresh guidelines which would supersede the earlier UPA dispensation’s policy on price fixation for natural gas, including that from KG basin, which has been the bone of contention between the Centre and RIL.

Earlier, the government had submitted before the court that the ‘new domestic natural gas policy’ was approved by the government raising the price of natural gas to US $5.61 per mmbtu from November 1 and had said that the recommendation of the Rangarajan Committee would not be given effect. The Rangarajan formula on gas pricing was approved by the previous UPA government. Rangarajan was Chairman, Economic Advisory Council to the then Prime Minister.

In its second audit of RIL’s eastern offshore KG-D6 block, the CAG on November 28, 2014 recommended disallowing the company from recovering US $279.8 million in cost of three wells as well as a part of expenditure the firm had incurred in area which was improperly declared discovery area.

The CAG found irregular payment of  $427.48 million to contractors, of which it sought disallowance of at least $77.36 million cost.


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