Audit a contractual obligation; RIL will abide by it: Moily

Amidst a row over CAG audit of Reliance Industries’ KG-D6 gas field spending, Petroleum Minister M. Veerappa Moily today said audit was a contractual obligation and hoped that the company will abide by it.

“I have already gone on record to say that it is a contractual relationship between the government and the respective contracting parties... Audit (of spending on oil and gas fields) is part of this (contractual obligation),” he told reporters here.

RIL had on Saturday stated that it had never contested the government’s right to get spending on the flagging KG-D6 gas fields audited by the Comptroller and Auditor General of India (CAG) but added that the consent must not lead to a performance audit of a private firm.

“... Allow them (RIL) to make a business,” Moily said. “They (RIL) will abide by that (contractual obligations). We need not create problems for either for them (RIL) or for the government and CAG.”

The row over CAG’s second round of audit of KG-D6 fields erupted after the Petroleum Ministry last week postponed a kick-off or ‘Entry Conference’ called to commence the scrutiny of spending in 2008-09 to 2011-12.

The meeting was called off due to differences over the nature and scope of audit to be conducted by CAG, with RIL saying it was open to a financial audit but not a performance scrutiny wherein complex technical decisions like hiring of a particular technology may come in for questioning.

In a Saturday evening statement, RIL said it “has at no time contested the Government’s right to conduct an audit by any agency, including the CAG, as provided in Section 1.9 of the Accounting Procedure of the Production Sharing Contract".

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 company had previously sought written assurance that CAG scrutiny would be an “audit of accounting books and records” as provided under the PSC and that it 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, it wants the audit to be carried at its premises and audit report be submitted to the Oil Ministry, as provided under PSC, and not to the Parliament.

The Petroleum Ministry, however, wants RIL to give CAG “unfettered access to account books” and pending that it has not approved the company’s investment proposals including annual budget for past three years.

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