CAG can fully audit gas producers: Rangarajan
03 Jan 2013
C Rangarajan, the chairman of the Prime Minister's Economic Advisory Council, has made it clear that the Comptroller & Auditor General has full authority to auditing oil and gas blocks operated by private firms.
This comes in the light of the long-running battle between Reliance Industries Ltd – which operates a gas find in the Krishna-Godavari Basin in the Bay of Bengal – and the government.
The CAG had earlier accused RIL of inflating exploration costs in order to reduce the government's share of profit.
Referring to oil and gas block contracts operated by private firms, Rangarajan, on Wednesday said the ''authority of audit by CAG is unquestionable''.
Rangarajan headed a committee that has just submitted its views on the complex issue of natural gas pricing. The committee suggested basing the price on a basket of international and domestic prices.
About the CAG's right to fully audit oil and gas producers' functioning, Rangarajan said the high-value producing should be audited by CAG itself, while blocks with low financial value can be audited by auditors recognised by the CAG.
Clarifying further, Rangarajan said the CAG would select blocks on the basis of ''financial materiality'', and the government's accounts watchdog would continue to have its statutory freedom to directly audit these.
