CBI may file case against Reliance

CBI may file case against Reliance

New Delhi: India’s federal investigating agency is considering registration of a case or multiple cases against Reliance Industries Ltd (RIL) for alleged irregularities in the operation of the firm’s block in the Krishna-Godavari (KG) basin, said three officials at the Central Bureau of Investigation (CBI), who declined to be named.

“The matter is at the inquiry stage and no information can be shared with the media," said Dharini Mishra, spokeswoman for the agency. A spokesperson for RIL declined to comment.

The three CBI officials, none of whom wanted to be identified given the nature of the issue and the allegations, also said that the case will name officials belonging to the Directorate General of Hydrocarbons (DGH) and the petroleum ministry.

CBI has been conducting a preliminary inquiry into the issue that’s now bolstered by the findings of a report by the Comptroller and Auditor General of India (CAG), that highlighted improprieties in RIL’s operation of the KG-DWN-98/3 block and raised questions about its operation of the lucrative KG D6 block.

Director general of hydrocarbons S.K. Srivastava did not respond to phone calls or to a message on his cellphone seeking comment. A spokesperson for the petroleum ministry declined to comment.

“The preliminary inquiry against RIL and others is in final stages and very soon a case will be registered," said one of the CBI officials cited above.

The second official cited above said: “We have evidence against the company (RIL) and DGH officials. It is a matter of time (before) we register a fresh case (on the basis of the preliminary inquiry). The last-minute vetting is being carried out."

The third CBI official confirmed this. All three officials spoke independently of each other.

Some of the issues CBI is investigating in its preliminary inquiry are:

a) DGH significantly reducing the penalty amount for RIL for not sticking to work commitments, a leniency that was denied to some state-owned companies.

b) DGH forcing state-owned firms to form an alliance with RIL for rig sharing in an arrangement that largely benefited RIL.

c) DGH and petroleum ministry officials favouring RIL by allowing the company to raise capital expenditure in the KG D6 block.

CAG, interestingly, did not specifically comment on gold-plating, or overstating, of costs by RIL—a charge levied by Reliance Natural Resources Ltd when it was engaged in a bitter battle with RIL over the supply of gas, before eventually arriving at a compromise in May 2010. But it did comment on the cost escalations in the company’s D6 block, particularly on the practice of RIL implementing the work programme even before obtaining approval for the increase in the cost of the project.

The second CBI official added that the agency could also register a separate case entirely on the basis of the CAG report pertaining to the issue of allowing RIL to retain the entire D6 area off the Andhra Pradesh coast.

In its Performance Audit of Hydrocarbon Production-sharing Contracts report, CAG said the explorer was allowed to retain the entire 7,645 sq. km area and was permitted to enter the second and third phase without “relinquishing 25% each of the total contract area at the end of phase-I and phase-II in June 2004 and 2005, respectively", in contravention of the production-sharing contract. The report also added that DGH changed its mind after initially disagreeing with RIL’s proposal of non-relinquishment.

Former petroleum minister Murli Deora said he was unaware of any such development.

According to the CAG report, the issue of relinquishment was referred to a committee under the chairmanship of the then additional secretary in the petroleum ministry, S. Sundareshan, which accepted RIL’s claim based on DGH’s recommendation, following which the minister’s approval was sought.

Former director general of hydrocarbons V.K. Sibal did not respond to phone calls or to a message left on his cellphone. Sundareshan, who is currently secretary in the ministry of heavy industries, declined to comment.

In an unrelated move, CBI registered a case in July against former DGH officials, including Sibal, for allegedly favouring Houston-based GX Technology in carrying out seismic survey in return for personal favours.