Oil Ministry refutes Kejriwal's charges about Mukesh Ambani

Oil Ministry refutes Kejriwal's charges about Mukesh Ambani
New Delhi:

Reacting to activist Arvind Kejriwal's allegations that the Prime Minister sold out the country to allow windfall profits to Mukesh Ambani's Reliance over its contract to develop the country's key natural gas field in the Krishna Godavari (KG) basin, the Oil Ministry today said the system is not influenced or guided by the whims and fancies of any individual or group.

Terming Mr Kejriwal's allegations as baseless and frivolous, the ministry said it is committed to upholding the rule of the law and taking decisions objectively without fear or favour.

Mr Kejriwal had said the government appears to be leaning towards allowing Reliance to charge more for the gas it supplies, a sanction which violates the contract and would allow the company to benefit by Rs 43,000 crore. 

"It appears that Mukesh Ambani and not the PM runs the country," Mr Kejriwal had alleged. "The PM's heart beats for Reliance and not the people of India," he had declared.

The press conference on Wednesday had been teased by Mr Kejriwal on twitter as "a big expose". It's his third installment in a campaign to "out" politicians allegedly guilty of graft.

Reliance refuted the charges, saying: "Irresponsible allegations made by IAC at the behest of vested interests without basic understanding of the complexities of a project of this nature do not merit a response."

Here are the highlights of what the Ministry said:

- Audit of oil & gas blocks was entrusted to CAG in 2007 by Murli Deora

- Contracts with RIL provides for two audits - one by Management Committee and other by the government

- The government can get audit done by its representatives or through Chartered Accountants

- In November 2007, CAG was requested to conduct special audit of Contracts for eight blocks

- Reliance Industries has raised certain apprehensions regarding second round of audit

- RIL has expressed their desire to discuss the issue further and the issues are likely to be finalized in the next few weeks

- The government made its stand clear in 2010 that the gas price revision cannot take place before 2014

- In 2006 itself the government rejected the gas price formula submitted by RIL

- Gas price was decided after due discussion by Committee of Secretaries (COS)

- Later, Economic advisory council also discussed and submitted gas pricing to EGoM in 2007

- EGoM set the price at $4.2/mmBtu at crude price greater or equal to $60 per barrel 

- In 2010 again, Murli Deora rejected RIL’s plea to hike gas price before 2014

- As per Initial Development Plan of KG-D6, recoverable gas reserves estimated was 3.8 trillion cubic feet

- Initially capex of $2.4 billion was approved

- In 2006, the gas reserves of KG-D6 was revised to 10.3 trillion cubic feet

- Seeing the higher reserves, capex of $8.8 billion was approved

- A revised field development plan for KG-D6 was submitted again in September 2012

- Production has declined substantially in KG-D6

- After achieving 67 mmscd gas production in 2010, it declined to 20.5 mmscd in 2012

- The government has already disallowed proportionate cost recovery by RIL because of lower production

- The government approved new bidding round (New Exploration Licensing Policy - NELP) in 1997

- NELP was implemented in 1999, during the NDA regime