CAG jolt to RIL on KG Basin work

Govt auditor says it has right to check pvt sector

Amid the controversy over the auditing of the Reliance Industries-operated Krishna-Godavari (KG) oil and gas block off the Andhra Pradesh coast, the Comptroller and Auditor General (CAG) has said it has full rights to audit the private sector.

Reliance Industries said the CAG’s right to conduct a audit is not applicable to private companies.

The government auditor said on Saturday it was entitled to scrutinise RIL as contractor of the KG basin as part of its performance audit of the petroleum ministry. News agency IANS quoting an official in the CAG office, said its audit of RIL KG block “has to be a performance audit and not just a financial one”. The official, according to the agency, said: “The CAG  is fully within its rights to look into the efficiency and economy in respect of revenues accruing to the Consolidated Fund of India.”

According to the CAG,  it was entitled to access all documents related to RIL’s contract with the government for exploration of KG basin gas. The statement came a day after the petroleum ministry had to cancel a meeting between the CAG and RIL officials.

Reliance said in its statement: “We appreciate the fact that the CAG is in agreement that it does not conduct performance audit of private operators and expects that no such performance related audit issues applicable to the government will be applied to any such audit.”

It said the CAG (Duties, Powers and Conditions of Service) Act, 1971, gave it “unfettered right of access to all records required for such audit and would override any conditions sought to be imposed on the audit process”. Reliance says its contract with the government does not allow the CAG to audit its performance.

The controversy over the RIL oil wells has escalated after the shifting of Petroleum Minister S Jaipal Reddy to Science and Technology Ministry and Opposition parties and civil society activities crying foul over it saying that the government has given in to corporate interests.

“RIL has at no time contested the government's right to conduct an audit by any agency, including the CAG, as provided in Section 1.9 of the Accounting Procedure of the PSC,” the company said in a statement.

Stating that it was a private operator functioning under a Production Sharing Contract (PSC), RIL said: “We appreciate the fact that the CAG is in agreement that it does not conduct performance audit of private operators and expect that no such performance related audit issues applicable to the government will be applied to any such audit,” the oil giant said.

According to the oil major, it was fully confident of its technical capabilities and “welcomes comments on operational matters if such comments come from experts having the requisite knowledge of the complexities of deep water operations in oil and gas sector”.

It added: “At all times RIL has fully co-operated with any auditor appointed by the government including in several cases where the government had already exercised its audit rights earlier or where such audit was beyond the period stipulated in the PSC.”