Reliance Ind objects to second round of CAG audit

Written By Unknown on Rabu, 17 Oktober 2012 | 15.45

Reliance Industries (RIL) has objected to a second round of CAG audit on the expenses it incurred on exploring the KG-D6 fields, reports CNBC-TV18 quoting Newswire18. It is also learnt that government will okay RIL's KG-D6 plan only if the CAG allows it to do so.

RIL has repeatedly told the oil ministry that the contract which it signed with the state did not have any scope for auditing the performance of the field by the CAG.

Sources said RIL had on September 18 written to the Oil Ministry 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 meters per day instead of rising to planned 80 mmscmd, but emphasised that CAG did not have powers to audit a private company.

RIL said CAG's 2009 audit, which it had agreed to as a one-time exception, turned out to be a 'performance' audit which was contrary to the provisions of the Production Sharing Contract (PSC). The PSC provides for checking of the contractor's accounts in order to verify the charges and credits but not questioning efficacies of processes or technology used in the complex deepsea operations.

The CAG had in its first round of audit questioned the 'reasonableness' of costs incurred in the gas field development and said the government should revisit the profit sharing mechanism. CAG, in the second round, is to audit spending made by RIL during 2008-09 and 2011-12.


 



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