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Open to CAG audit
August, 18th 2009

Reliance Industries (RIL) has told the government that it is "ready and open" to scrutiny by any of its agencies, including CAG, for the expenditure it has incurred on discovering and developing the KG-D6 gas fields.

At a meeting called by the petroleum ministry on the issue of Comptroller and Auditor General (CAG) of India auditing the books of private operators, the company stated that it had nothing to hide and was open to scrutiny, a government official present at the meeting said.

The government had in 2002 asked CAG to audit Production Sharing Contracts like the one for KG-D6 block with RIL, signed under the New Exploration Licensing Policy (NELP), but the premier auditor had then stated that its charter neither permitted audit of private accounts nor did it have the manpower to do so.

The government with the concurrence of CAG, appointed independent third-party auditors on the basis of an open bidding process. "These auditors have been operating on behalf of the government and auditing the accounts of companies like RIL," the official said.

However in 2007, CAG was asked to audit the exploration spends and the agency conducted audit of all the private company reports, copies of which were available with the DGH.

"They have not closed the audit report as they wanted to see some of the originals," the official said, adding that CAG had not asked any documents directly from RIL and was at present dealing with only the DGH or the ministry.

The ministry at today's meeting told the operators that the government can appoint CAG to audit their oil and gas field spends.

B Ganguly who represented RIL at the meeting refused to speak to the media after the meeting.

The official said CAG wanted to seek the originals of some of the documents whose copies were available with the DGH.

However, third-party auditors have looked at all the originals.

RIL, the official said, has stated that it will not object to the government's rights under PSC but some private firms had objected to the need for re-doing the audits already done by government-appointed auditors.

CAG had been seeking some originals from the DGH and it had at no point approached RIL directly and so the company had never denied any of the documents to it, he said.

The official explained CAG's reluctance to ask for documents directly from private firms as it is seeking a clarification on its charter if it can go into books of private companies.

The oil ministry had called the meeting of operators like RIL and BG Group of UK to tell them that under PSC government can appoint any auditor for verifying the expenditure they incurred on exploration and development of oil and gas assets.

CAG, which was also represented at the meetings, can be engaged to do special audit under certain circumstances, the ministry told the private operators.

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