RIL got ‘huge, undue benefit' at taxpayers' expense

Discussion in 'Economy & Infrastructure' started by SHASH2K2, Jun 14, 2011.

  1. SHASH2K2

    SHASH2K2 New Member

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    RIL got ‘huge, undue benefit' at taxpayers' expense


    In a blow to Mukesh Ambani and Manmohan Singh — whose government stands accused of providing “huge” and “undue benefit” to Reliance Industries Ltd. — the Comptroller and Auditor General has indicted the Petroleum and Natural Gas Ministry for allowing “irregularities and bending rules” to “oblige” RIL in the Krishna Godavari basin gas fields, leading to a massive and as yet “unquantifiable” loss to the national exchequer.
    Though his name does not figure directly in the CAG report, Murli Deora was the minister during whose tenure these irregularities occurred. Mr. Deora ran the PNG ministry from January 2006 till January 2011, when he was moved to Corporate Affairs.
    In its 193-page Draft Report on production sharing contracts (PSCs) in the oil and gas field — a copy of which is with The Hindu — the CAG exposes the “close nexus” between RIL and the “bureaucrats” working in the Petroleum Ministry as well as its Directorate General of Hydrocarbons (DGH). This allowed Reliance to retain its entire offshore acreage, rather than surrendering those areas where it had not found oil or gas so that the government could invite fresh bids from other companies. Also, RIL was uncritically allowed to hike the capital expenditure for developing Dhirubhai-1 and 3, the largest of 18 gas finds in the KG-DWN-98/3, popularly known as the KG-D6 block, by a whopping 117 per cent though this meant a revenue loss for the exchequer.
    This unvalidated cost inflation allows RIL to get away with paying less royalty to the government, the CAG notes, pointing to a basic flaw in the nature of PSCs which offers private explorers little incentive to keep capital expenditure down.
    “The increase in cost from $2.39 billion in the Initial Development Plan to $5.196 billion in the Addendum to the Initial Development Plan is likely to have a significant impact on the Government of India's financial take. However, at this stage, based on the information provided, we are unable to comment on the reasonableness, or otherwise, of the increase in cost, both overall and in respect of individual line items,'' the CAG stated in its report that has been sent to the Petroleum Ministry for comments.
    In an annexure, the CAG questions various items of expenditure including one for a vessel MOB-DEMOB where costs were increased more than four times from $91 million to $366 million but where the details of that spend were not provided to it by RIL. Other expenses added up to less but suggested a quest for featherbedding – such as buying expensive diesel for offshore operations from an RIL family company rather than from a cheaper PSU supplier.
    RIL's “initial” capital expenditure plan was for $2.4 billion, which was increased to $5.2 billion for Phase-I with another $3.3 billion for Phase-II. The total amount comes to approximately Rs. 45,000 crore. Total gas output today, however, is much less than what the company had indicated on the basis of its capex.
    Reacting to the CAG draft report, a RIL spokesman said: “Reliance Industries has not received a copy of the aforesaid report and hence is unable to comment on specific issues. The company strongly affirms that as a responsible Operator, it has fully complied with the requirements in the PSC at all times in conducting petroleum operations, and refutes any suggestion to the contrary.”
     
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  3. SHASH2K2

    SHASH2K2 New Member

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    I always had suspicion about reliance is getting undue favours from Murli Deora. I wonder how many scams will be unearthed in coming days. Congress is going to create a world record when it comes to corruption and MMS name will be history for being the leader of most corrupt government in history of the world.
     
  4. utubekhiladi

    utubekhiladi The Preacher Elite Member

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    how much did we lost in this scam?
     
  5. SHASH2K2

    SHASH2K2 New Member

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    Favour was given to reliance at cost of companies like ONGC and other PSU's .Honestly speaking figure cannot be predicted in this case . I wonder even God will be able to predict the correct amount as congress troubleshooters will prove even that figure wrong.
     
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  6. utubekhiladi

    utubekhiladi The Preacher Elite Member

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    give me a rough figure will you?
     
  7. SHASH2K2

    SHASH2K2 New Member

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    wait for sometime and detals will come out in the open.But like 2G scam data or money involved will not be accurate and will be subject to debate . However wrongdoing by minister cannot be ruled out and someone should track Murli Deora Swiss back account .
     
  8. SHASH2K2

    SHASH2K2 New Member

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    New Delhi The CAG has rapped oil ministry and its technical arm DGH, charging it with favouring Reliance Industries.

    However, it did not say if the Mukesh Ambani firm overcharged the government when it more than doubled KG-D6 gas field cost and caused loss to state exchequer.

    The CAG report said the ministry and the Directorate General of Hydrocarbons allowed Reliance to raise cost of developing the nation’s largest gas fields by 117 per cent.

    It said rules were also bent to grant “huge benefits” to Reliance


    source
     
  9. amitkriit

    amitkriit Senior Member Senior Member

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    According to a person I know, here is the true story behind the discovery:

    Gas in the Basin was discovered by a group of scientists and engineers in ONGC. When RIL got the lead, the company put all of them on it's pay roll, secretly off course. These people kept working on ONGC's expense for RIL's benefit and deliberately kept this discovery hidden. After a few years, when dust settled down, all of them resigned from ONGC en-mass and joined RIL. This is how RIL really discovered Gas in the Krishna-Godavari basin.
     
    Last edited: Jun 14, 2011
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  10. SHASH2K2

    SHASH2K2 New Member

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    Oil companies tried to duck audit, says CAG

    The Comptroller and Auditor General (CAG) has said that it faced obstacles from private oil and gas companies, some of which operate India's prestigious fields, as it probed accounts to unearth their irregularities. The independent government auditor said its work was "interrupted due to difficulties in obtaining access to the records of operators" The CAG specifically mentioned BG (the former BritishGas) - operated Panna-Mukta-Tapti (PMT) joint venture, in which Reliance Industries and state-controlled ONGC are its partners.
    The auditor said the obstacles limited its scope to quantify the financial losses to the exchequer in the PMT operations.
    As reported by HT on Monday, the CAG in its draft report to the petroleum ministry on the audit of records of the operators of three major oil and gas fields - including KG-D6 (Reliance Industries), Rajasthan oil field (Cairn Energy) and PMT fields (BG-Reliance-ONGC) had mentioned as "huge" the losses resulting from the violations of contractual provisions by these private operators without exactly quantifying them.
    While all three companies including Reliance, Cairn Energy and BG were initially reluctant to share records, it was only after repeated intervention of the petroleum ministry that made Reliance and Cairn share the relevant records, the CAG said.
    However, even after that, the PMT venture failed to furnish the required records to the CAG until it wrote its draft report, it added.
    Reacting to this, a BG Spokesperson in India said, "All issues related with Production Sharing Contracts (PSCs) are confidential and we are unable to comment on any specific observation raised by the CAG in its audit report."
    The CAG report said, "In the absence of these records, we are unable to vouchsafe the reliability of the expenditure stated to have been incurred by the PMT JV during 2006-07 and 2007-08," adding that as a result, it could quantify the impact on the government's share of the profit under contractual terms.




     
  11. Ray

    Ray The Chairman Defence Professionals Moderator

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    And who reaped the harvest?

    The Flautist?
     
  12. The Messiah

    The Messiah Bow Before Me! Elite Member

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    I always thought reliance was the 'dirtiest' of all the companies in India.
     
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  13. ganesh177

    ganesh177 Regular Member

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    Reliance is known for dirty games from the days of dhirubhai ambani. He developed unique skill of twisting the laws for his own benefits and he taught babus about corruption.
     
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  14. SHASH2K2

    SHASH2K2 New Member

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    The stock price of Reliance Industries Ltd (RIL), the country's largest private sector company, has come under selling pressure from foreign institutional investors (FIIs), say market players.

    This was after the office of the Comptroller and Auditor General of India (CAG) said in its recent report that RIL was shown undue favour by the Union ministry of petroleum and natural gas and by the Director General of Hydrocarbons (DGH) in its Krishna-Godavari (KG) basin block, causing big loss to the exchequer.
    Following this, HSBC, one of Asia's largest banks, downgraded RIL stocks to 'neutral' from ‘overweight’ and cut its price target to Rs 1,040 from Rs 1,084.
    The RIL share price on Thursday fell to a 23-month low. It ended at Rs 888 on the Bombay Stock Exchange (BSE) and Rs 886 on the National Stock Exchange (NSE). Intra-day, the stock touched a low of Rs 884 on NSE and Rs 885 on BSE. Since Monday, when the CAG report was put out, RIL has declined nearly six per cent. It is the heaviest scrip in the benchmark Sensex, with a weightage of 11.1 per cent.

    "After the CAG report, a large number of FIIs have started selling RIL stock. There is discomfort among institutions. The air on the CAG report needs to be cleared, as the allegations made are serious," said Mumbai-based independent equity advisor S P Tulsian, who tracks RIL closely.

    CAG, in its draft report on KG DWN-98/3, or the KG-D6 block, said, "DHG allowed the Mukesh Ambani-led company to hike capital expenditure for developing Dhirubhai-1 and 3, the largest of 18 gas blocks, by 117 per cent from $2.4 billion to $8.5 bn between May 2004 and October 2006. This was likely to have significant adverse impact on the government’s financial take." RIL has denied the allegations.

    HSBC took keen note of the wording and its implications in downgrading RIL. "The investigation could result in a freezing of bureaucratic decision making, which would hamper RIL's ability to carry out exploration and production activities effectively in its blocks,” HSBC said in a note.

    Market players say no large institution wants to risk client money after what happened with the Satyam Computer stock after its corporate governance scam.

    The CAG allegations against RIL are similar to those raised by Mukesh Ambani's brother, Anil Ambani, in 2009, when the court battle between two Reliance Groups had reached a crucial stage in the Supreme Court. At the time, Anil Ambani, through advertisements in leading newspapers, alleged RIL had inflated project costs in the KG basin.

    Reliance Industries has underperformed the benchmark Sensex by 12 per cent over the past three months on concerns of falling gas production from the KG-D6 block/

    RIL's $20-bn deal with BP, one of the country's largest foreign direct investment proposals, cleared by the government this week, has done nothing to boost investor sentiment in the RIL counter.
     
  15. SHASH2K2

    SHASH2K2 New Member

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    BJP leader and chairman of the Public Accounts Committee of the Parliament -- which examines the revenue and expenditure of the government -- Murli Manohar Joshi has urged the petroleum ministry to reply to the draft report of the Comptroller and Auditor General of India (CAG) as soon as possible.

    He questioned the statement by the oil ministry that it needs time to study the draft CAG report on whether government officials colluded with those of Reliance Industries (promoted by India's richest person, Mukesh Ambani) and allowed the latter to show higher expenses on oil production that was legitimate.

    Joshi seemed to hint that the Government has been sitting on the Reliance report from CAG for a long time. "What I want to ask is when did they get the report? How long will they take to vet it," he said.

    He pointed out that the oil ministry's contention that it needs to read the draft properly was misleading. "This is not a one-stage process.. The draft is actually the third stage. Before the draft report, the CAG sends a detailed questionnaire raising its doubts on each point as asking it to comment point by point.. These comments and justifications are incorporated in the draft report," Joshi said.

    Joshi also trained his guns on the group of ministers who allowed Reliance Industries to charge a price of $4.2 for gas when government companies were selling the same gas for $1.8 per unit.

    "Why did you increase the price of gas so much. why are you allowing them too loot others? What was the justification for the formula [under which gas was valued?] Under what pressure did the eGoM take these decisions? How much losses were caused by this to the government," Joshi asked. "This is not countering corruption, but encouraging the corrupt," he said.

    Joshi's questions mirror those raised by Anil Ambani, the brother of Reliance Industries' chairman, in front-page ads across the country during a dispute between the siblings. Anil Ambani had alleged that the government was allowing Reliance to charge very high price for the gas, even though the cost of producing the gas was very low.

    "The cost of production is 1.2 (dollars), but the price was more than 4," Joshi pointed out.

    Petroleum minister Murli Deora was soon shunted out of the oil ministry after the controversy over the gas prices.
     
  16. utubekhiladi

    utubekhiladi The Preacher Elite Member

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    you are not the only one man.... :pound:

    Dirubhai ambani ka sapna....
    ..... pura hindustan ka paisa aapna....


    :pound: :pound: :pound: :pound:
     

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