RIL fully cooperating with audit: CAG

The Comptroller and Auditor General (CAG) has stated that Reliance Industries (RIL) is providing full access to records and making available copies of documents it has sought for audit of expenses incurred on the nation's largest gas field.

CAG, which started audit of the Krishna Godavari basin D6 field on December 21, after completing the first round of scrutiny sought a completely new set of documents and access to RIL's entire corporate SAP (computer-based accounts).

However, since the documents and the photocopies of records sought ran into thousands of pages, there was a delay, prompting CAG to shoot off a complain to the Oil Ministry.

Within weeks of the January 27 complaint, CAG has again written to the Petroleum Ministry saying it has made progress in receipt of requisitioned documents as well as their copies.

"There has been progress both in receipt of requisitioned documents as well as in making photocopies," CAG Principal Director of Audit K R Sriram wrote on February 12. Since, the entire RIL is not being audited by CAG, segregating records pertaining to on the KG-D6 fields was taking time.

"On the issue of access to the SAP IT system, there has been technical difficulties in segregating access to all KG-D6 and only KG-D6 related records, and we are still interacting with RIL officials on how to proceed further in this regard," he wrote adding a clearer position on updated work/payment status in respect of transactions/expenditure during 2006-07 and 2007-08 would emerge after the second round of audit is completed.

Sources said the CAG had previously complained to the Petroleum Ministry of not getting full access to documents pertaining to KG-D6 from upstream regulator, Directorate General of Hydrocarbons even though the DGH gave all records which the premier auditor had listed.

DGH strongly rebutted such claims saying CAG had sought documents which it had not previously listed, they said adding the upstream regulator thereafter asked CAG to give in writing the documents it wanted and then asked it to sign a check-list after it furnished all of them to CAG.

CAG has since then not complained of any missing links at DGH end.

The Petroleum Ministry asked CAG to audit the accounts of RIL, which is facing allegations of gold-plating gas field costs that has increased fourfold to $8.8 billion. RIL had on August 17 agreed to an audit by CAG but the nation's premier auditor could put its house in order for the audit only by December.

CAG's scope of audit of PSC in respect of the block KG-DWN-98/3 (KG-D6) awarded to RIL, for two financial years - 2006-07 and 2007-08, with access to records of previous years linked to transactions of these years.

It is also understood that scope of this audit will far exceed the normal course of audit by CAG and the prime objective may be to detect fraud, if any, by the operator (RIL) allegedly in collusion with the oil regulator DGH and Ministry of Petroleum and Natural Gas.

Sources said while the ministry wanted special audit of accounts from 2003-04 fiscal, CAG wanted scope of examination of records be restricted to 2006-07 and 2007-08 only.

The government in 2002 asked CAG to audit PSCs like the one for KG-D6 block with RIL, but the premier auditor had then stated that its charter neither permitted audit of private accounts nor did it have the manpower to do so.

Subsequently, the government with the concurrence of CAG, appointed independent third-party auditors on the basis of an open bidding process. These auditors have audited accounts of companies like RIL.

However, in 2007, CAG was asked to audit the exploration spending and the agency conducted audit of all the private company reports, copies of which were available with the DGH. To close the audit, they needed to seek originals, which have now be made available to them, they said.