CAG awaits clarity on RIL's D6 audit

In Nov 2007, CAG was requested to conduct special audit of Production Sharing Contracts for 8 revenue generating blocks

The government is yet to reach a decision on the kind of audit Comptroller and Auditor General (CAG) would do in case of Reliance Industries Limited operated KG D6 block. The auditor has been on loggerheads with RIL over doing a field examination instead of auditing the production sharing contract (PSC) through the books of the company.

While CAG does not conduct performance audit of private operators, it can do the performance audit of PSCs which is covered under section 16 of the CAG’s Act. “Profit Petroleum is non-tax revenue credited to the Consolidated Fund of India and such audit would involve examination of all records including those of the operator which are relevant to our audit,” an earlier statement by CAG said.
The oil ministry is expected to have a joint meeting with CAG and RIL to resolve this matter after last such meeting got cancelled. “The
meeting was called at official level to discuss the procedural issues of audit by CAG and due to certain administrative inconvenience it was
postponed on October 26, 2012 itself,” a press statement by oil ministry stated.

In November 2007, CAG was requested to conduct for special audit of Production Sharing Contracts for eight blocks from where revenue is
generated. CAG had initiated audit of 4 blocks for financial year 2006-07 and 2007-08 and submitted its report in August 2011, which is
under examination by Public Account Committee.

In May 2012, it was decided that CAG would undertake audit for the year 2008-09 to 2011-12. An oil ministry statement said that Reliance
Industries Limited (RIL) had raised certain apprehensions regarding this audit and expressed their desire to discuss the issue further.
“The issues are likely to be finalized in the next few weeks,” the statement mentioned earlier.

CAG cannot go ahead with this second phase of audit till it gets access for field inspection which is still a bone of contention. Since
CAG does not interact with the “representatives of audited entities,” the matter has to be resolved by the oil ministry.