National auditor CAG today castigated the Oil Ministry for allowing Reliance Industries to retain its entire eastern offshore KG-D6 block in contravention of the Production Sharing Contract, but did not comment on more than tripling of the field development cost.
The government's handling of Air India too has come under fire.
The CAG, in its much-awaited report tabled in Parliament today, did not say if the capital expenditure for KG-D6 being raised from USD 2.4 billion proposed in 2004 to USD 8.8 billion in 2006 was unjustified or inflated.
It faulted the Oil Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), for allowing Reliance to retain the entire 7,645 sq km KG-DWN-98/3 (KG-D6) block in the Bay of Bengal after the giant Dhirubhai-1 and 3 gas finds were made in 2001.
As per the PSC, Reliance should have relinquished 25 per cent of the total area outside the discoveries in June, 2004, and 2005, but the entire block was declared as a discovery area and the company was allowed to retain it.
"We recommend that the Ministry of Petroleum and Natural Gas should review the determination of the entire contract area as 'discovery area' strictly in terms of the PSC provisions," the CAG said, asking for delineation of the discovery area and relinquishment of the rest.
The CAG was critical of government oversight, particularly on high value procurement decisions, and sought an 'in-depth review' of 10 contracts, including eight awarded to Aker Group by Reliance on a single-bid basis.
Air India
In the case of Air India, the report deals with the period Praful Patel was minister for aviation, and has slammed the entire process to acquire as many as 111 aircraft as a huge waste and risky.
This apart, the use of the flag carrier's aircraft to ferry VIPs has also been criticised, particularly in the light of delayed payments for such services. The report also wonders why Air India's capacity utilisation of aircraft is much lower than private carriers.