It seeks Petroleum Ministry’s intervention to ensure audit of KG-D6 block is not carried out under CAG (DPC) Act

The Mukesh-Ambani-owned Reliance Industries Limited (RIL) has written to the Petroleum and Natural Gas Ministry seeking its intervention and an assurance that the audit of the KG-D6 block by the Comptroller and Auditor-General (CAG) would not be carried out under the CAG Duties, Powers and Conditions of Service (DPC) Act and that the CAG should clearly distinguish between its audit of the Petroleum Ministry and that of RIL.

In a letter to Joint Secretary (Exploration), A. Giridhar, the company has argued that the audit could not be commenced under Section 1.9 of the accounting procedure of the Production Sharing Contract (PSC) while the scope, extent and manner of such audit was laid down by the CAG (DPC) Act. “It is imperative to obtain a confirmation from the CAG that it does not consider the CAG (DPC) Act to apply to the proposed audit of the contract (RIL) and that it will distinguish between its audit of the Petroleum Ministry and its audit of the Contractor under Section 1.9 of the Accounting Procedures to the PSC,” said president and COO (Business) B. Ganguly in the letter.

The letter claimed that while the Ministry had maintained, all this while, that the proposed audit would not be a performance audit of the Contractor, the CAG had now introduced the concept of propriety audit, which went beyond the mere certification or tracing of charges and credits by reference to the underlying invoices, receipts and contracts. “We had agreed to an audit of the Contractor where, in accordance with Section 1.9 of the Accounting Procedure to the PSC, we would be providing the CAG with all records for certification of charges and credits as required under the PSC and would be happy to provide justification if there is any procedural deviation,” it states.

The company claimed that it had, during the kick-off meeting with the CAG on January 9 and the subsequent meeting on January 16, sought that the audit team confirm that it had been appointed as the government’s representative under Section 1.9.2 of the accounting procedures to the PSC to audit the contractor and that RIL would be the auditee of the CAG.

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