Are there signs of reconciliation between Petroleum & Natural Gas Ministry and Reliance Industries Ltd (RIL)?

In a communication to the Principal Director of Audit, Economic and Service Ministries, dated October 23, the Petroleum Ministry said that RIL had agreed to the second round of auditing of RIL-operated D6 block, subject to certain conditions.

If interpreted, this would mean the CAG will be able to do only the financial audit, not performance audit -- an issue that was the bone of contention between the parties involved.

RIL had been refusing any kind of performance audit by the CAG on the grounds that it breached the PSC. While the Ministry and CAG have been maintaining that the Government auditor can look into the operator books unconditionally.

In fact, these differences between the parties involved were cited as the main reason for RIL unable to get the D6 management committee's nod for the operators’ plans to raise output from the block. The finalisation of the decisions was pending due to RIL’s refusal to allow a second round of audit by the CAG of its spending on the D6 block. At stake were approvals worth millions of dollars.

Now, with the auditing issue being resolved, the operator of D6 may get a fillip for taking steps to increase output from the block.

“RIL has agreed for an audit under Section 1.9 of the Accounting procedure of the PSC by the Comptroller and Auditor General of India (CAG) and to cooperate with such audit without prejudice to any of their rights and contentions as stated in their reference letter,” it said.

RIL, while agreeing to another audit through a letter dated October 18, had reiterated that the proposed audit would be as prescribed in the PSC, and not a performance audit of the operator.

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