Ministry rejects RIL’s contention not to place report in Parliament on KG-D6 block

Following the tough stand taken by the Comptroller and Auditor General (CAG) against buckling down to any conditions for undertaking audit of Reliance Industries Limited’s (RIL) KG-D6 oil and gas block, the Petroleum Ministry has asked RIL to submit itself to CAG audit warning that any further delay would be seen as reneging on contractual provisions by the contractor (RIL).

It has also rejected the contention by RIL that the audit report of CAG pertaining to the KG-D6 block audit should not be placed in Parliament and should be only used for internal purposes by the Petroleum Ministry.

Replying to the October 18 letter written by the RIL President and COO (Business), B. Ganguli, the Petroleum Ministry has stated that audit under Section 1.9 of the accounting procedure of production sharing contract (PSC) is not a performance audit of the contractor as has been clarified amply a number of times.

It further states that PSC provides for audit beyond two years under exceptional circumstances as already informed through various communications to the contractor (RIL) on different occasions and as late as October 23. “Disclosure to Parliament does not come under Article 26.4 of the PSC, as pointed out by RIL, as Parliament is party of the Union of India, signatory to the contract and not a third party,’’ it adds.

It has pointed out that RIL has agreed for audit by CAG under Section of 20 of the CAG (DPC) Act, 1971. Further, it stated that Profit Petroleum was non-tax revenue of Government of India which is to be audited by the CAG under Section 16 of CAG Act, with or without the consent of the contractor. Further, Article 151 of the Constitution mandates that CAG place before Parliament all audit reports of union accounts. “Hence conditionalities to audit by the government and CAG are not tenable as per law. You are once again asked to cooperate with CAG audit team and immediately provide all records/information requisitioned by them in respect of the subject block. Any further delay in providing access to concerned records is likely to be viewed as reneging on contractual provisions by the contractor,’’ it said. Recently, CAG had stated that the operator’s “restrictive conditions” for carrying out an audit of the KG-D6 offshore block “impinge upon the basic mandate, rights and obligations of the (CAG)” to conduct as well as report the results of its audit to Parliament. It had said that the restrictive conditions were unacceptable to it and the CAG’s (Duties, Powers and Conditions of Service) Act gave it an unfettered right and would override all conditions sought to be imposed on the audit process.

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