Days before CAG presents its final audit report to Parliament, Reliance Industries fears that the official auditor was not taking into account the reply it submitted to CAG’s draft findings on eastern offshore KG-D6 gas fields.

RIL Senior Vice President (Commercial) Mr B Ganguly in a August 11, nine-page letter to the Comptroller and Auditor General (CAG) and the oil ministry said the company’s voluminous response and the presentations made to the auditor do not find a mention in the minutes of a meeting CAG held last month to finalise audit of KG-D6 fields.

“What is surprising is that in spite of many issues having been clarified by RIL during the Exit Conference (held on July 12) as well as in its written responses, the record of the Exit Conference as minuted appears to take no cognizance of the reasons put forward by the operator,” he wrote.

CAG’s June 7 draft report said the oil ministry and its technical arm DGH favoured RIL by turning a blind eye to the Mukesh Ambani firm increasing capital expenditure on its KG—D6 gas fields and allowed it to retain entire exploration acreage in violation of the Production Sharing Contracts (PSCs). It said the increase in capex from initial $2.4 billion to $8.8 billion would lower profit for government.

Asking CAG to take on record RIL’s response to the draft audit findings, Mr Ganguly said “in case the CAG disagrees with out reasons, our technical observations, or our interpretation of the PSC, the reasons for such disagreement may also be made known“.

He said during the July 12 Exit Conference, the CAG team neither raised any issue nor sought any clarification or information from RIL on any of its audit findings. RIL said the actual expenditure on KG-D6 till March 31, 2011 was about $5.7 billion only as against $8.8 billion estimated in 2006.

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