KG-D6 plans held up as RIL rejects CAG audit
17 October 2012
The ministry for petroleum and natural gas has informed the prime minister's office that it has not given final approval to the plans of Reliance Industries Ltd to raise natural gas output from the flagging Krishna-Godavari D6 fields as the company has refused to allow audit of its expenditure by the Comptroller & Auditor General of India (CAG), according to a report.
Petroleum secretary G C Chaturvedi told a meeting convened by Pulok Chatterji, principal secretary to the prime minister, on 24 September, that the KG-D6 block oversight committee, headed by the director-general of hydrocarbons (DGH) with representatives of the ministry, has agreed to all the development proposals made by RIL, a PTI report citing sources said.
Chaturvedi told the meeting that finalisation of the decision was, however, pending due to RIL's refusal to allow a second round of audit by the CAG of its spending on the eastern offshore KG-D6 block, according to the report.
Reliance has been maintaining for some time now that the government auditor is not the competent authority to audit the books of a private company. It is willing to submit its books on the KG-D6 expenditure to a non-government auditor, it has said.
Reliance had written to the ministry on 18 September saying it was open to financial audit of its spending on the field, which has seen production drop by over 55 per cent to 27.5 million standard cubic metres per day instead of rising to planned 80 mmscmd, but not by the CAG.
While the management committee of the KG-D6 block had, in August, agreed to approval of the capital spending plans pending for the past three years, the resolution has so far not been signed. Also, at least three discoveries RIL had made in the block have so far not been declared commercial, a step necessary to begin production from them.