India’s official auditor has on record said his office was yet to ratify the $9 billion capital expenditure claimed by Mukesh Ambani-led Reliance Industries for tapping natural gas from the Krishna-Godavari basin.The remarks to IANS clearly run contrary to a statement by Director General of Hydrocarbons V.K. Sibal recently that the office of the Comptroller and Auditor General (CAG) of India had already carried out the necessary audit on the matter.

‘We are still to complete the audit of Reliance Industries’ books. We don’t have the mandate to audit the books of a private company. That is why the books were not made available to us,’ said Vinod Rai, CAG of India.

‘We are in touch with the government to complete the audit at the earliest,’ Rai told IANS, even as officials at the audit office said a letter had been written to the oil ministry to get relevant documents and responses from Reliance.

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The remarks also assume significance in the wake of the Anil Ambani group alleging that Reliance Industries had gold-plated — or grossly overstated — the capital expenditure for the production of gas from the Krishna-Godavari basin.

Subsequently, the Director General of Hydrocarbons – the regulator and custodian of the country’s oil assets – had said that the capital expenditure was above board since the official auditor has duly looked it into the same.

‘The CAG (Comptroller and Auditor General) team has carried out the audit work. A CAG audit has recently been completed,’ Sibal had said in a statement, while seeking to give a clean chit to Reliance Industries.

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‘The idea of gold-plating betrays a lack of knowledge of business economics. Inflating the expenditure does not benefit any stakeholder — neither the contractor nor the government,’ he said.

‘No company would like to increase its investment unproductively. Every additional dollar of wasteful investment dents the profit of the contractor.’

But the Anil Ambani group had said that Reliance Industries had deliberately inflated the capital expenditure, adding that the same will result in losses worth billions of dollars to the government.

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The Anil Ambani group said based on the original estimate of the gas output of 40 million units a day, when the fields were handed over to Reliance Industries, the capital expenditure was pegged at $2.5 billion.

How can this more than triple to $9 billion when the output has been envisaged to only double to 40 million units, questioned the Anil Ambani group which is fighting a bitter legal battle with Reliance Industries over the Krishna-Godavari gas.

In June, the Bombay High Court asked Reliance Industries to supply 28 million units of gas from the fields to Anil Ambani-led Reliance Natural Resources for 17 years at $2.34 per unit.

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But Reliance Industries challenged the verdict in the Supreme Court, which heard the case July 20 and fixed Sep 1 as the next date of hearing. The court also asked all parties to file their replies on the government position on the matter by then.

source: Sify Finance

Tags: ambani brothers dispute, anil mukesh ambani disput, KG basin, Reliance Industries, ril disput

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