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Anil questions DGH credibility; latter rebuts

DGH on Wednesday rebutted Anil Ambani`s charge that it had approved inflated cost quoted by RIL.

Mumbai: Clashing over RIL`s gas field cost, an Anil Ambani group firm today questioned the credibility of audits commissioned by the Directorate General of Hydrocarbon, evoking sharp protest from the regulator.

ADAG firm Reliance Power on Wednesday alleged that there was a
conflict of interest between the experts who carried out the
validation and the contractor (RIL) for approving the Rs
45,000 crore field development costs.

RPower CEO J P Chalsani today said Mustang Engineering
has been advising RIL on various projects, while P
Gopalakrishnan, the other independent expert, was on faculty
of the School of Petroleum Technology, which is chaired by RIL
Chairman Mukesh Ambani.

None of the two experts could be contacted for comments.

The government, he said, stands to lose Rs 30,000 crore
revenue because of the inflated capex, as RIL is entitled to
recover the entire cost before sharing revenues with the

DGH Director General V K Sibal said in New Delhi that
RIL`s cost of gas production even after higher capex was
comparable to any other field in the country.

On the experts, he said Mustang was selected through an
international bid, while Gopalakrishnan was on DGH`s panel.

The cost of production for Dhirubhai 1 and 3 fields at
the approved field development cost of USD 8.836 billion came
to USD 1.28 per million British thermal unit, he said.

Chalsani questioned DGH`s stature, saying according to
the Petroleum Ministry was only an advisor to it.

He said RIL`s capital expenditure for development of gas
fields had increased from USD 2.47 billion proposed in 2004 to
USD 8.8 billion in 2006, while production only doubled to 80
million standard cubic meters per day.

When production doubles the cost does not double
factoring the economics of scale, he noted.

"Simply put, the more RIL claims to have spent on capital
expenditure, the less the government gets as its share from
the revenues and more delayed is the timing when the
Government gets its revenues," Chalsani said, demanding that
the report of CAG on D6 fields audit be made public.

DGH has said that the increase in D6 capital expenditure
was warranted as production facilities were increased from 40
mmscmd to 120 mmscmd and field life was increased from 9 years
to 13 years.

Sibal said the production cost too compares to the USD
1.25 per mmBtu cost of gas from Tapti field operated by BG
Group of UK and USD 1.12 per mmBtu from Hazira field of
Canada`s Niko Resources.

"I don`t want to join issues with them but you should let
people who know this subject decide on the issue," Sibal said.
"If Rs 45,000 crore capital expenditure claimed by them was
inflated, the cost of production in terms of cost per million
British thermal unit would also come higher."

Bureau Report

From Zee News

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