RIL wants offshore gas fields audit to be kept secret, CAG says no

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SummaryThis means critical issues like capital investments made by RIL could come under inspection.

Sharp differences have emerged between the Comptroller and Auditor General (CAG) and Reliance Industries Ltd (RIL) over the scope of an audit into the production sharing contract between the company and the government for RIL’s off-shore gas fields.

RIL had set two conditions: the audit should maintain the confidentiality arrangement between it and the government; and the scope of the audit should be restricted to accounting procedures of the contract only.

Refusing to accept the conditions, the CAG, in a letter to the oil ministry, has pointed out that all its audit reports have to be tabled in Parliament, and hence cannot remain confidential. It has also said that the term procedure will be subject to interpretation and will be much wider than envisaged by the ministry. Sources said this means that critical issues like capital investments made by RIL could also come under inspection.

Following these differences, the petroleum ministry, under new minister Veerappa Moily, deferred a meeting which was slated to be held on Wednesday to work out an agreement.

Last week, the ministry, under then minister Jaipal Reddy, agreed to allow RIL to invest more in the KG D6 fields to ramp up production which has slumped to around 27 mmscmd from an expected 68 mmscmd. But the permission hinged on RIL accepting the CAG audit of its fields for 2008-09 to 2011-12.

Earlier, the ministry had assured RIL that the audit would not expand into a performance audit, and had also advised the CAG in this regard. An audit report by CAG on the same subject, covering an earlier period, had said that higher investment by RIL had led to a lower share of profits for the government as per the contract.

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