CAG did not seek RIL, Cairn comments for audit report

India's top auditor, the Comptroller and Auditor General (CAG), did not seek comments from Reliance Industries (RIL) and Cairn India before levying a series of allegations against the private firms, including that of getting undue favours, in its draft audit report, the Oil Ministry has said.

While the CAG all through the audit of RIL's KG-D6 gas field and Cairn's Rajasthan oilfields last year avoided meeting the companies, the auditor did not mention its observations or seek comments in interactive meetings it had days before finalising its draft report.

"In the interactive meeting, one of the operators gave a presentation on how the project was executed and no audit observations were discussed. In the other meeting, only one observation was discussed with the operator," the Oil Ministry wrote to the CAG on June 22.

"The operators were not given any draft report before this meeting so that they could have come prepared with some reply," it added.

The CAG, in its June 8 draft report, said that the ministry and its technical arm, the Directorate General of Hydrocarbons, favoured RIL and Cairn by allowing them to retain their entire exploration acreage, turning a blind eye to increases in capital expenditure and giving additional area in violation of the Production Sharing Contracts (PSCs).

The Oil Ministry asked the CAG to now give the private operators a chance to present their views, but the nation's top auditor turned down the request.

"The contractors have seen and replied to the audit requisitions and memos only. They have not been given the draft report which has

the response to audit queries and observation of CAG," the ministry wrote on June 22.

"Relevant extracts of the draft report have to be given to the concerned operators for a proper reply; Ministry of Petroleum and Natural gas has initiated this process."

The CAG on the same day replied back saying its "audit mandate, scope and coverage" did not provide for seeking a response on its draft observations and the government can raise audit objections after it has finalised its report.

Within days of the early June meetings with Reliance and Cairn, the only formal interaction the CAG had with them, the auditor sent its draft report to the ministry for comments.

The ministry cited provisions of the Production Sharing Contract (PSC) signed with Reliance and Cairn to state that seeking comments on audit observations was a must.

"Any audit exception shall (have to) be made available by the government in writing to the contractor within 120 days following completion of the audit in question and thereafter, the contractor shall answer within 120 days of receipt of such notice," it wrote.