RIL open to CAG audit on gas field expenditure

As a follow up of the meeting called by the Oil Ministry yesterday to tell private operators that it can appoint CAG to audit their oil and gas field costs, RIL Senior Vice President (Commercial) B Ganguly wrote, saying that the company had "no objection to any special audit of KG-D6 PSC (Production Sharing Contract) by CAG as desired by the government."
Ganguly, who represented RIL at the meeting yesterday, had told the Ministry verbally that the company was "ready and open" to any scrutiny.
In the letter, he stated that the PSC gives government the right to audit records of operators within two years from the end of a financial year and in case of KG-D6 the same has been exercised until 2006-07.
Despite the accounts being audited by the government appointed auditor, RIL said: "To reiterate the fact that we are transparent in our operations... we convey our no-objection to any special audit of KG-D6.
"However, we hope that this is one time exception which does not create a precedent for the future," Ganguly wrote.
RIL further stated that all its operations were being conducted "in accordance with good petroleum industry practices and in compliance with all the provisions of the PSC."

Ganguly asked the ministry to intimate the years for which it wants the special audits to be undertaken, the modalities and schedule. "We assure you of our fullest cooperation."
The government had in 2002 asked CAG to audit PSCs like the one for KG-D6 block with RIL, signed under the New Exploration Licensing Policy (NELP), 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 been operating on behalf of the government and auditing the 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.
"They have not closed the audit report as they wanted to see some of the originals," an official said, adding that CAG had not asked any documents directly from RIL and was at present dealing with only the DGH or the ministry.
The official said CAG wanted to seek the originals of some of the documents whose copies were available with the DGH. However, third-party auditors have looked at all the originals.

CAG had been seeking some originals from the DGH and it had at no point approached RIL directly and the company had never denied any of the documents to it, he said.
The official explained CAG's reluctance to ask for documents directly from private firms as it is seeking a clarification on its charter if it can go into books of private companies.

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