Acting on the complaint of Controller and Auditor General (CAG) that Mukesh Ambani-owned-Reliance Industries Limited (RIL) and its partner BP were not cooperating in audit of Production Sharing Contracts (PSCs), the Petroleum Ministry has warned that such non-cooperation will lead to non-approval of annual budgets and capital spending for three years.
The warning came following reports that RIL Executive Director, P.M.S. Prasad and BP India head, Sashi Mukundan had met the Petroleum Minister, S. Jaipal Reddy on July 13 and warned that if approval did not come fast, gas production would go down drastically from 2015 onwards. Taking a strong note of the developments, the Petroleum Ministry in a formal statement, sought to set the record straight.
The Hindu had reported on July 16 that CAG had informed the Petroleum Minister that the contractor – RIL and BP – were not cooperating in audit of accounts.
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The statement by the Ministry said that CAG, which has been mandated to carry out an audit of spending on KG-D6 block from 2009-10 to 2011-12, had recommended withholding of sanction for annual work plans and budgets if access to records is denied to CAG. CAG had submitted audit of KG-D6 for 2006-07 to 2008-09 to the Parliament in September last year and RIL's denial of access to records was adversely commented upon in the previous audit, the statement added.
The company representatives were requested to make all the records and accounts of the KG D6 block available to the CAG as provided for in the PSC, the statement further said.
The block Oversight Committee (OC) has not approved budgets and work programme for 2010-11, 2011-12 and 2012-13. RIL has disputed that CAG cannot do a performance audit and has denied CAG access to all its records in the latest audit exercise.
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``The representatives of RIL and BP met Mr. Reddy on July 13 and represented for speedy clearances in four of the blocks - NEC25 in Mahanadi Basin, KG-D6 and two in Cauvery basin. It was agreed at the meeting to recommend to the competent authority on two issues namely the Declaration of Commerciality of certain wells in the NEC-25 and KG-D6,’’ the statement added.