Rejecting the contention that Reliance Industries Limited (RIL) has been given any kind of leverage in grant of approvals, the Central Government, on Thursday, asserted that not only it had turned down RIL’s demand that the CAG audit report, when finalised, not be placed before Parliament but also pressurised it to accept audit under Section 1.9 of the production sharing contract (PSC) for a financial audit of the company for the KG-D6 block off the East Coast in Andhra Pradesh.

“There are no pre-conditions involved in grant of approvals of the KG-D6 block. We had right through maintained that an audit by the Comptroller and Auditor General (CAG) would be carried out under Section 1.91 of PSC, and it is being done that way. We had nowhere insisted on a performance audit. RIL has agreed to give CAG access to all the accounts, SAP system and other related material, and we have informed RIL to co-operate with CAG team,’’ government sources told The Hindu here.

The sources also rejected the theory that under the PSC, the government cannot audit contractor’s accounts if there is a lapse of more than two years of the particular financial year in carrying out the audit. “It is true that there is a clause that after a lapse of two years, an audit cannot be carried out. But there is also a provision which states that an audit can be carried out even after a lapse of more than two years in exceptional circumstances. We are doing the exercise under exceptional circumstances, and, therefore, the government is valid in undertaking this exercise. If RIL does not have anything to hide, then why are they afraid of an audit or giving access to their accounts?” a senior official asked.

In fact, sources said RIL had insisted that the CAG report should not be made public or placed before Parliament, a condition which the government outrightly rejected. “We have told them clearly that they will have to submit to an audit. At the most what we can do is supply them the interim report so that they could put across their point of view on the observations of CAG. They can also seek to be part of the exit conference organised by the CAG but the report, as a matter of procedure, will be placed before Parliament,” sources said.

The Petroleum Ministry, while conveying its approvals for the development proposals of RIL-BP combine, had stated that this was done only after RIL had agreed to give access to CAG. The proposed audit would be under Section 1.9 of the Accounting Procedure of the PSC and not a performance audit of the operator (RIL), the Ministry has stated in its communication. The Ministry has also written to Principal Director of Audit (Economic & Service Ministries), CAG, stating that, subject to certain conditions, RIL has agreed for an audit under Section 1.9 of Accounting Procedure to the PSC by CAG and to cooperate with such audit without prejudice to any of their rights and contentions.

However, officials in the Petroleum Ministry insisted that no waivers or concessions had been offered and everything had been done in line with provisions of the PSC and what had been insisted all along by the Ministry and the Directorate-General of Hydrocarbons (DGH).

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