CAG completes RIL gas field cost audit; report to take time

NEW DELHI: Government auditor CAG said it has completed auditing the expenditure that Reliance Industries incurred in developing Krishna Godavari basin gas field D6, which was at the centre of an inflated billing controversy.

“The audit is complete at CAG end. We are currently in the final compilation stage after which the report will be sent to the Oil Ministry for comments,” a CAG official said.

CAG, which went into the $ 8.8 bn cost incurred by Reliance in producing gas from the nation’s largest field, had examined and received replies on its audit comments from the Mukesh Ambani-led firm.

“In another 30 days, we plan to send it (the report) to the Petroleum Ministry,” the official said.

When asked if Reliance had fully cooperated with the Comptroller and Auditor General (CAG) in submiting records pertaining to KG-D6 fields, the official said: “They have given, if not 100 per cent, but mostly what we wanted.”

The CAG plans to complete the entire audit process, which will include incorporating oil ministry’s comments on its findings, by November.

“In 3-4 months time, we will be done with the special audit report. Based on the ministry’s comment, CAG will decide the necessity of placing the report in Parliament,” he said.

Since the audit of KG-D6 is not a statutory audit, as is being done in case of public sector firms, the premier auditor would decide based on ministry’s comments on its findings if the report has to be placed in the Parliament.

“Our intention of the audit is to find out if there was any loss of revenue to the government because of any improper increase in capital expenditure in the KG-D6 fields,” he said.

Government is to get between 10 to 90 per cent of the revenue generated from sale of gas over the life of the field after deducting expenses incurred by the operator (Reliance).

“While it took a while to persuade the ministry for the CAG audit, it then took the ministry some time to persuade the companies as this audit was the first of its kind. So the delay of over two years,” he said.

CAG started audit of Krishna Godavari basin D6 field on December 21 last year. It, however, faced some difficulty in accessing new documets it sought after completing the first round of scrutiny. But within a month, RIL complied and the premier auditor made good progress thereafter.

Petroleum Ministry asked CAG to audit the accounts of RIL, which faced allegations of gold-plating gas field costs that has increased four-fold to $8.8 bn.

RIL had on August 17 agreed to an audit by CAG but the nation’s premier auditor could put its house in order for the audit only by December.

CAG’s scope of audit of PSC in respect of the block KG-DWN-98/3 (KG-D6) awarded to RIL, for two financial years – 2006-07 and 2007-08, with access to records of previous years linked to transactions of these years.

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