<p>Reliance Industries Limited (RIL), a Mukesh Ambani owned energy enterprise, has submitted its reply to the Comptroller and Audit General (CAG), following CAG’s allegation that points towards violation of constitutional mandate and unwarranted increase in capital expenditure by the energy giant.</p>
<p>CAG had put under the scanner the Krishna – Godavari (KG D6) basin exploration costs during its audit stating gold plating of its costs by the operator. The audit body also red marked oil ministry and its technical arm Directorate General of Hydrocarbons (DGH) for reportedly approving these costs and giving undue benefits to the private operator.</p>
<p>Reliance Industries, in its reply, has negated the charges by saying that CAG has overlooked the cost-recovery and production sharing provisions of the production sharing contract (PSC), and has not been able to quantify its claim of cost inflation. RIL representatives stated that costs of exploration have gone up substantially across the world, and the resultant effect was being faced in India as well. This CAG had failed to acknowledge in its audit report. Also, RIL has asserted that CAG, as a government body, should limit its function to evaluating the validity of costs and not question the reasonableness of costs in the process, considering an operator will employ his best judgment and technical knowledge to carry forward a process at any point in time. RIL representatives, headed by PMS Prasad, stated that KG D6, has in fact, been one of the most prolific, cost effective and timely projects ever seen in India, and it has been acclaimed worldwide for the same.</p>
<p>RIL presented its points in the exit conference held on Tuesday, along with other operators who had been put under the audit scanner by CAG.</p>
<p>The oil ministry had also stood its ground stating that it favored what was in the best interest of the sector and not the players. It will, however, take necessary actions against players found guilty of gold-plating of costs.</p>