Have powers to go into 2G, profit-sharing in petroleum, says CAG

Facing questions over jurisdiction, the Comptroller and Auditor General (CAG), Mr Vinod Rai, has said the watchdog has got “unfettered” powers to conduct ‘performance audit’ which includes going into issues like 2G spectrum allocation and profit-sharing in petroleum.

Referring to the controversy surrounding gas allocation from KG-D6 basin, he said the audit in this case was done under the “aegis” of the Oil and Petroleum Ministry and made it clear that CAG was seeking a response from private operators like Reliance through the Ministry without “entertaining” them directly.

“In a letter issued in June 2006, the Finance Ministry clearly states that a performance audit is totally within the scope of the CAG’s audit and that he should have unfettered access to records,” Mr Rai told the ‘Outlook’ magazine.

“Now, whether it is 2G spectrum allocation or profit-sharing in petroleum, these are deemed performance audits because public goods have been made available for a private partner to exploit,” he underlined.

The remarks assume significance as questions have been raised over the jurisdication of CAG recently, with even the Prime Minister, Dr Manmohan Singh, saying two days ago that “never in the past has the CAG decided to comment on a policy issue. It should limit the office to the role defined in the Constitution.”

Responding to criticism by Reliance that its views were not taken in the case of audit of gas allocation from KG-D6 basin, the CAG said, “We have told the Ministry that the portions that concern any private operator should be shared with all the three operators to get their inputs.

“We are neither dealing with any operator directly nor are we entertaining them.”

Mr Rai said the CAG conducted the audit of the Petroleum Ministry on the basis of a request made by the Government in 2006, informing that “a number of concerns had been raised regarding the profit-sharing contract with the three parties, not just Reliance.”

He was talking in the context of the CAG’s draft report which stated that the Oil Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), favoured Reliance and Cairn by allowing them to retain their entire exploration acreage, turning a blind eye to increases in capital expenditure and giving additional area in violation of the Production Sharing Contracts (PSCs).

On allegations that the draft report was leaked by the auditor, the CAG asked what it would gain by doing so.

“We would like it to come out as a splash. Why would we want it leaked in bits and pieces?” he said.

Asked about the Telecom Minister, Mr Kapil Sibal, trashing the CAG’s assessment that 2G spectrum allocation caused a loss of Rs 1.76 lakh crore, Mr Rai said the auditor’s report itself mentions that the amount of loss can be debated upon.

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