No performance audit: Ministry
25 Oct 2012 7:34 AM IST
The Oil Ministry has given a nod to Reliance Industries Ltd’s (RIL) plans to raise natural gas output from the flagging KG-D6 and agreed that the CAG cannot do a performance audit of the company. The ministry has sent a letter to RIL saying ‘all the government nominees’ on KG-D6 block oversight panel have ‘already approved’ of all the development proposals made by RIL, said sources. It relented to the RIL stand that an audit by the CAG of its spending on KG-D6 block has to be a financial audit and not a performance audit.
‘...the proposed audit would be under Section 1.9 of the Accounting Procedure of the Production Sharing Contract, and not a performance audit of the operator (RIL),’ the ministry wrote.
The ministry has also written to the Principal Director of Audit (Economic & Service ministries), CAG, stating that ‘subject to certain conditions, RIL has agreed for an audit under Sector 1.9 of Accounting Procedure to the PSC by CAG and to cooperate with such audit without prejudice to any of their rights and contentions’.
The Oil Ministry had been withholding approvals to RIL’s investment plans, saying the company must first agree to CAG doing a second round of audit of KG-D6 field for 2008-09 to 2011-12 period.
RIL had stated that it was ready for a CAG audit if done under the PSC which provides for checking of the contractor’s accounts in order to verify the charges and credits but not questioning efficacies of processes or technology used in the complex deepsea operations. The ministry finally agreed to RIL position.
After the ministry action, RIL can now implement urgent remedial measures at KG-D6 where output has dipped by more than 55 per cent in past two years to about 26 million standard cubic meters per day.
‘...the proposed audit would be under Section 1.9 of the Accounting Procedure of the Production Sharing Contract, and not a performance audit of the operator (RIL),’ the ministry wrote.
The ministry has also written to the Principal Director of Audit (Economic & Service ministries), CAG, stating that ‘subject to certain conditions, RIL has agreed for an audit under Sector 1.9 of Accounting Procedure to the PSC by CAG and to cooperate with such audit without prejudice to any of their rights and contentions’.
The Oil Ministry had been withholding approvals to RIL’s investment plans, saying the company must first agree to CAG doing a second round of audit of KG-D6 field for 2008-09 to 2011-12 period.
RIL had stated that it was ready for a CAG audit if done under the PSC which provides for checking of the contractor’s accounts in order to verify the charges and credits but not questioning efficacies of processes or technology used in the complex deepsea operations. The ministry finally agreed to RIL position.
After the ministry action, RIL can now implement urgent remedial measures at KG-D6 where output has dipped by more than 55 per cent in past two years to about 26 million standard cubic meters per day.
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