RIL says CAG cannot audit its operations in KGD6 basin

Reliance Industries (RIL) has said the CAG was not authorised to audit the accounts of its operations in KGD6 basin  or the production sharing contract (PSC), and wanted the government to appoint an auditor other than CAG.

The CAG is set to start the second phase of audit of RIL's accounts on its operations in the country's natural gas field and a negative judgment, it is feared, may mean trouble for the energy major.

According to a report in the DNA newspaper, in a letter written to the petroleum ministry, RIL argued that under the current rules, CAG was not authorised to audit its accounts or the production sharing contract as RIL  was an operator of the block in question. According to the company, CAG could audit the 'performance' of DGH or the petroleum ministry, but not a private sector company like RIL which was functioning as a contractor.

RIL pointed out that accounting procedures of PSC differed from CAG Act. Production sharing contract was signed between the government and oil and gas firm.

''It would appear that the CAG intended and did carry out a '' performance'' audit of the contractor. This is beyond the scope of Section 1.9 of the accounting procedures to the production sharing contract,'' the letter said.

According to the company, it agreed for CAG audit in 2009 'strictly as a one time exception'. The company further said, the government required to invoke section 20 of the CAG Act, which would make the CAG a representative of the ministry of petroleum and natural gas (MoPNG).