ADAG claims conflict of interest in RIL capex approval

06 Aug 2009

1

An Anil Ambani group firm has questioned the credibility of audits commissioned by the Reliance Industries' KG-D6 facility by the directorate general of hydrocarbons, evoking a sharp response from the Dehra Dun-based regulator.

Reliance Power alleged a conflict of interest between the experts who conducted the validation and the contractor (RIL) for approval of the Rs45,000-crore field development costs.

Reliance Power CEO J P Chalsani said while addressing a press conference in New Delhi that Mustang Engineering has been evaluating RIL's D6 capital expenditure claims. The company also has been advising RIL on various projects hence it was an interested party.

The other independent expert on the audit, P Gopalakrishnan served as faculty of School of Petroleum Technology chaired by RIL chairman Mukesh Ambani.

He added that the government would lose Rs30,000 crore revenue because of the inflated capex as RIL would be entitled to recover the total costs before it shares revenues with the government.

DGH director general V K Sibal said in New Delhi that RIL's production cost even after the capex was comparable to similar operations in the country. He added that all over the world the actual cost of production is considered to judge exploration and development and not capital expenditure.

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