CAG office restarts KG-D6 audit

CAG had suspended the finance audit mid way in January following issues raised by the company over the extent of their scrutiny

The office of the Comptroller and Auditor General of India (CAG) on Thursday restarted auditing of the KG-D6 gas field operated by Reliance Industries (RIL), from the latter’s office in Mumbai. CAG had suspended the finance audit midway in January, following issues raised by the company over the extent of the scrutiny.

“The CAG team is in Mumbai to take forward the process,”  RIL executive director P M S Prasad told Business Standard. The petroleum ministry had assured the CAG that the auditing team would have access to all records under Article 25 of RIL’s production sharing contract (PSC) with the government.

The company’s earlier objection was that the auditor must not look into the performance aspects of the block. CAG had written to the ministry on March 12, saying it needed to examine these aspects, too, in order to safeguard the interest of the government.

Interestingly, in its previous report on the audit, tabled in Parliament in 2011, the CAG report’s cover had termed it a performance audit but claimed on the inside that "we do not intend to, nor have we, conducted a performance audit of the activities of the operator".

The government’s petroleum secretary, Vivek Rae, himself had two meetings with CAG Vinod Rae. The audit has to now be done for 2008-09 to 2011-12 under Section 20 of the C&AG (DPC) Act, 1971. The earlier audit, tabled in Parliament, was for 2006-08. "The audit will happen. We are pretty clear about that," Rae had said on April 2. "We are making all efforts to see that CAG is able to perform its duty."

In a voluminous reply of about 230 pages, RIL, the biggest private sector petroleum company, was critical of the CAG terming in 2010 an expense incurred by RIL as “erroneous”. “To leap to an opinion that an expense considered unwise is, for that reason, dishonest or that a practice which is considered unsatisfactory is necessarily dishonest, is clearly erroneous,” said a RIL letter.