According to the former secretary to the GoI, activities of RIL in the KG basin have a long-term bearing on the public exchequer and therefore the petroleum ministry should allow the company’s accounts to be audited by the CAG
EAS Sarma, former secretary to the Government of India (GoI) has reiterated the demand to conduct a performance audit of Reliance Industries (RIL) and the Krishna Godavari (KG) Basin. In a letter sent to prime minister Dr Manmohan Singh and petroleum minister Veerappa Moily, the former secretary raised several issues related with RIL’s operations in the KG Basin while reinterring the need for conduction audit by Comptroller and Auditor General (CAG).
“The exploration and development effort put in by RIL in the KG Basin, the technology adopted, the resources discovered, the costs incurred, the claims made on pricing of gas and the costs to be reimbursed are all matters that impinge directly and indirectly on the public exchequer. All such matters should be subject to public scrutiny and RIL should be held accountable to the public,” Mr Sarma said in his letters.
Last week, RIL, in a statement, said it had never contested the government’s right to get the company’s spending on KG-D6 gas fields audited by the CAG but hoped it will not be subjected to a performance audit. Stating that it was a private operator functioning under a Production Sharing Contract (PSC), RIL said it ‘appreciates’ CAG's reported statement that it does not conduct performance audit of private firms.
”We appreciate the fact that the CAG is in agreement that it does not conduct performance audit of private operators and expect that no such performance related audit issues applicable to the government will be applied to any such audit,” RIL said.
The ministry of petroleum & natural gas, which continues to withhold permissions for RIL’s investment proposals, postponed a kick-off meeting scheduled for the CAG to begin audit of spending in the KG-D6 block by the Mukesh Ambani-led company. The CAG had called an Entry Conference with RIL and the oil ministry to begin its second round of audit that is to cover RIL’s spending on KG-D6 gas fields during 2008-09 to 2011-12. However, on 29th October, the ministry wrote letters calling off the 31st October meeting, sources told to PTI.
According to the PTI report, the meeting was called off due to differences over the nature and scope of audit to be conducted by the CAG. RIL has sought written assurance that the CAG scrutiny would be an “audit of accounting books and records” as provided under the production sharing contract (PSC) and that the company would not be “required to provide documents, information or any clarification of matters which go beyond scope of audit under Section 1.9 of the Accounting Procedure of the PSC.”
Also, RIL wants the audit to be carried at its premises and audit report to be submitted to the oil ministry, as provided under PSC, and not to the Parliament.
Mr Sarma, in his letter to the petroleum minister, said, that from the reports appearing in the press, he understands that the ministry has some reservations on asking the CAG to conduct a performance audit of RIL’s operations. In this connection, the former secretary has raised following points of relevance...
“I request you to keep all these concerns in view and entrust the CAG with the task of a comprehensive performance audit of RIL’s accounts for the KG Basin operations. It should be unconditional. I believe that such an action on your part will inspire confidence in all of us and protect the public interest,” Mr Sarma concluded.
Here is the letter written by Mr Sarma to the Prime Minister…
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( 2 )All PPP Projects Should be under the Purview of CAG Audit fully unlimitedly.( 3 )Many Scams are coming out in PPPs,as quid pro quos.Even if GOI erred in signing contract with Conditions,they will be void,if CAG Performance Audit is objected citing those conditions. Hats off to Mr. Sarma for Boldly taking up with Ministry/PM.