Seeks withholding of approvals, says Moily

Stating that Reliance Industries Limited (RIL) had not granted full access of KG-D6 block records to Comptroller and Auditor General (CAG), Petroleum and Natural Gas Minister M. Veerappa Moily, on Tuesday, told Parliament that CAG had said that since full access to KG-D6 records was pending, the Petroleum Ministry should examine all relevant issues closely and carefully before considering the desirability of any further approvals of capital expenditure.

Mr. Moily informed the Raja Sabha in a written reply that RIL had agreed to audit by CAG for block KG-DWN-98/3 for the years 2008-09 to 2011-12 without prejudice to the rights and contentions of the contractor under the contractual provisions. Mr. Moily clarified that CAG had not asked Petroleum Ministry to withhold approvals to RIL.

However, CAG had recommended that pending complete submission of all supporting records by the operators of Panna-Mukta-Tapti (PMT) and KG-D6 relating to expenditure for previous years up to 2011-12 and comprehensive and detailed scrutiny thereof to verify that government’s financial interests have not been adversely affected in any way, the Ministry may examine all relevant issues closely and carefully before considering the “desirability of any further approvals” of capital expenditure through the annual work programme and budget, development plans or otherwise, except those of an emergent nature.

Mr. Moily said that the government had directed the contractor (RIL) to provide access to all records, accounts, documents of the block to CAG as per Production Sharing Contract (PSC) and extant legal framework.

Similarly, officials in the Ministry said CAG would restrict its audit in the case of KG D6 to financial audit of RIL and the performance audit of Petroleum Ministry and DGH. “CAG has sent us a communication that the audit of Block KG-D6 will be strictly as per Section 1.9 of the accounting procedure to the production sharing contract (PSC). The PSC provides for a financial audit — checking of the contractor’s accounts in order to verify the charges and credits, but not a performance audit that scrutinises efficacies of processes or technology used in the complex deep sea operations.

However, sources said through the performance audit of the Ministry and the DGH, CAG would do a proper scrutiny of all the documents, records, financial statements and SAP system and would seek documents from RIL in this regard. The CAG has also made it abundantly clear that the audit would not be for internal consumption, as demanded by RIL, and the report would be presented to Parliament for scrutiny. “Through direct performance audit of Ministry/DGH, CAG will indirectly speak about the performance of the KG-D6 and also scrutinise various issues pertaining to it and make comments on the way government handled the whole situation pertaining to RIL,” the official added.

Officials in the government were also of the view that this might not be the end of confrontation between CAG and RIL and the government auditor could seek various documents relating to tendering process followed for buying equipment or in selection of service providers, something which RIL was unlikely to grant access to. The CAG is also likely to examine whether government’s profit take from KG-D6 and its subsidy output on power and fertiliser increased on account of use of imported LNG due to KG-D6 output of just 23 million standard cubic meters per day (mmscmd) not matching the projected profile of 80 mmscmd.