Asks Petroleum Ministry to withhold approvals for their failure to submit records

Upset at the repeated failure of Reliance Industries Limited (RIL) to submit for audit records and information relating to the Krishna Godavari D6 block, the Comptroller and Auditor-General has asked the Petroleum Ministry to withhold all approvals to the Mukesh Ambani-owned company, except in emergency situations.

The government auditor has also asked the Ministry not to clear the plans of British Gas (BG) for exploration projects as it had also failed to submit information and records relating to the Panna-Mukta-Tapti gas-fields.

Sources in the government said that soon after Veerappa Moily took over as Petroleum Minister this month, following the “unceremonious” exit of Jaipal Reddy, the CAG wrote to the Ministry, pointing to the continuous failure of the two companies to submit the records it had sought.

“The CAG, in its communication, has pointed out that every effort was being made to thwart the audit by the constitutional body, and one after another obstacle was created in the conduct of a smooth audit till 2011-12. Both RIL and BG are shying away from providing information and have adopted an ‘indifferent’ attitude to the CAG, resulting in the audit coming to a standstill,” the sources said.

Furthermore, the sources said, the CAG wrote to the Ministry, asking that it immediately direct RIL to submit all records pertaining to the KG D6 block for audit up to 2012, as any increase in the capital expenditure would have an adverse impact on the government’s interest. “Till the time RIL and BG submit the relevant records for audit and cooperate with the CAG, their approvals should be held back except in emergency circumstances,” it said.

Earlier this month, the CAG strongly objected to the “restrictive conditions” laid down by RIL for an audit, which it said “impinge upon the basic mandate, rights and obligations of the CAG” to conduct an audit and report the results to Parliament.

In a letter to Petroleum Secretary G.C. Chaturvedi on October 26, two days before Mr. Reddy was shunted out, the CAG said the conditions were unacceptable, and the CAG’s (Duties, Powers and Conditions of Service) Act, 1971, gave it an unfettered right and would override all conditions sought to be imposed on the audit process.

In it, the government auditor listed the conditions laid down by RIL: audit be restricted to “accounting books and records;” audit of the years that were time-barred be subject to the consent of the operator; audit report be submitted to the Ministry and not Parliament; audit be subjected to confidentiality arrangements between parties to the production-sharing contract; and the CAG be bound not to use the information acquired during the audit for any other audit under the Act.