CAG snubs OilMin,says RIL consulted
Within hours of OilMin slamming it for not consulting RIL,Cairn,CAG said that it did consult RIL.
Government auditor CAG said that it had consulted Reliance Industries Ltd RIL before finalising the draft performance audit report on hydro carbon production sharing contracts at its KG-D6 gas fields.
“At no stage did this office CAG refuse any operator an opportunity to respond to observations made by us”,the Comptroller and Auditor General CAG said in a statement while responding to reports that the auditor did not give an opportunity to RIL to present its views.
The auditor said that in the case of performance audit on hydrocarbon production sharing contracts,”interactive meetings were held with two operators,including RIL,prior to the finalisation of the draft performance audit report”.
However,in a letter dated June 22,the Petroleum Ministry said the CAG did not mention its observations or seek comments of the private firms on its audit objections during the interactive meetings it had with RIL and Cairn days before finalising its draft report.
Such non-disclosure was not not in line with the production sharing contract because of which government will not not be reverse any cost recovery or disallow any expenditure,the government letter said.
The CAG said the performance audit follows a structured,systematic and objective architecture,which involves taking into account all relevant facts furnished by the concerned parties to ensure a balanced and objective reporting.
The government auditor said that as per the audit methodology the draft report was forwarded to Ministry of Petroleum and Natural Gas and ‘Entry and Exit conferences’ with the Oil Ministry as per the standard practice.
“It is for the ministry to take a view on what operator-specific points it needs to share,at this stage,with the operators,” the CAG said.
The CAG,in its June 8 draft report,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.
In the draft report,the CAG said rules were bent,enabling Reliance to retain the entire 7,645 square kilometre KG-DWN-98/3,or KG-D6 block,in the Krishna Godavari Basin off the East Coast.
Also,the development plan Reliance submitted for Dhirubhai-1 and 3,two of the 18 gas discoveries in the KG-D6 block,was not in compliance with the PSC and the ministry and the DGH turned blind eye to the company raising capital expenditure without having begun work on the previous one.
OilMin bats for RIL,Cairn against CAG?
India’s top auditor,the CAG,did not seek comments from Reliance Industries and Cairn India before levying a series of allegations against the private firms,including that of getting undue favours,in its draft audit report,the Oil Ministry has said.
While the CAG all through the audit of Reliance’s KG-D6 gas field and Cairn’s Rajasthan oilfields last year avoided meeting the companies,the auditor did not mention its observations or seek comments in interactive meetings it had days before finalising its draft report.
“In the interactive meeting… one of the operators gave a presentation on how the project was executed and no audit observations were discussed. In the other meeting,only one observation was discussed with the operator,” the Oil Ministry wrote to the CAG on June 22.
“The operators were not given any draft report before this meeting so that they could have come prepared with some reply,” it added.
The CAG,in its June 8 draft report,said that the ministry and its technical arm,the Directorate General of Hydrocarbons,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.
The Oil Ministry asked the Comptroller and Auditor General CAG to now give the private operators a chance to present their views,but the nation’s top auditor turned down the request.
“The contractors have seen and replied to the audit requisitions and memos only. They have not been given the draft report which has the response to audit queries and observation of CAG,” the ministry wrote on June 22.
“Relevant extracts of the draft report have to be given to the concerned operators for a proper reply; Ministry of Petroleum and Natural gas has initiated this process.”
The CAG on the same day replied back saying its “audit mandate,scope and coverage” did not provide for seeking a response on its draft observations and the government can raise audit objections after it has finalised its report.
Within days of the early June meetings with Reliance and Cairn,the only formal interaction the CAG had with them,the auditor sent its draft report to the ministry for comments.
The ministry cited provisions of the Production Sharing Contract PSC signed with Reliance and Cairn to state that seeking comments on audit observations was a must.
“Any audit exception shall have to be made available by the government in writing to the contractor within 120 days following completion of the audit in question and thereafter,the contractor shall answer within 120 days of receipt of such notice,” it wrote.
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