The government said on Tuesday that its statutory auditor would audit the Krishna-Godavari block licensed to Mukesh Ambani-run Reliance Industries Ltd known as K-G D6 for two financial years starting 2006-07. Minister of state for petroleum and natural gas Jitin Prasada told the Rajya Sabha that Reliance Industries has expressed willingness to provide all details and access to the records of K-G D6, also known as DWN 98/3, to the Comptroller and Auditor General of India (CAG).
The CAG is now ready to audit the block, the minister said in a written reply to a question raised by members of Parliament Amar Singh and Jai Prakash Narayan Singh. In D6 block, RIL has 90% participating interest and is the operator, with Niko Resources Ltd holding the rest.
The government?s intention to audit and the company?s willingness to give access to its record come in the wake of allegations that the private developer had exaggerated the development cost at $8.8 billion. ?The CAG has received most of the initial documents from RIL,? Prasada said.
The government has a right to get the development costs audited as per a provision in the production sharing contract it has signed with the company. Access to the contractor?s documents is necessary to ascertain the extent of their compliance with the terms and conditions of the contract. It is also vital for the audit assurance regarding royalty and profit petroleum, which involve government stake.
The audit is also significant in the context of the Anil Dhirubhai Ambani Group?s legal tussle for gas from the D6 fields. ADAG?s Reliance Natural Resources Limited (RNRL) had alleged that RIL deliberately inflated the capital expenditure that will result in major losses to the government. It questioned how the capital expenditure originally pegged at around $2.5 billion when the fields were given to RIL, more than triple to around $9 billion when the estimated gas output only doubled to 80 million units a day.