The Petroleum Ministry has said that the Comptroller and Auditor General (CAG) has the right to undertake the audit of Reliance Industries Ltd (RIL)’s KG D6 block on behalf of the government.

In a missive written to A. M. Bajaj, Principal Director of Audit, Economic and Services Ministries, the Petroleum and Natural Gas Ministry stated that it had examined the scope, extent and manner of an audit in respect of the KG-DWN-98/3 block, and also the issues raised by RIL in the matter.

“We have examined the matter and come to a understanding that CAG is being requested to undertake the audit of block KG-DWN-98/3 of RIL under Section 20 of the CAG’s Duties, Powers and Conditions of Service (DPC) Act, 1971. The CAG may kindly confirm that the understanding of Ministry of Petroleum is acceptable for the purpose of the current audit so that the contractor (RIL) could be informed accordingly. This will enable the audit process to move forward,” the letter stated.

The letter from the Petroleum Ministry also stated that the right of the government to audit the records of the contractor flowed from the provisions under Article 25.5 of the Production Sharing Contract (PSC), signed between the government and the contractor. “ In normal course, CAG is the auditor, and Ministry of Petroleum are the auditees as per statutory provisions. In the current audit, CAG will be the auditor on behalf of the government, while RIL will be the auditee,” the letter added.

The Principal Director of Audit (Economic and Service Ministries) A.M. Bajaj had written, on January 28, to the Joint Secretary (Exploration) A. Giridhar that RIL had not been cooperating in the audit exercise and had withheld records and financial statements sought by the CAG audit team.

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