National auditor conducting performance audit on Reliance Industries contract

National auditor conducting performance audit on Reliance Industries contract

The Comptroller and Auditor General of India (CAG), the national auditor, has written to the Petroleum Ministry asking it to hold off approval to Reliance Industries (RIL) and British Gas (BG) for exploring more oil wells, sources told NDTV.

In its letter, the CAG has said it is conducting a performance audit on the production sharing contract (PSC) of the KGD-6 and Panna-Mukta-Tapti (PMT) gas blocks. British Gas is the operator of the PMT blocks.

The development comes a day after the ministry’s technical wing, the Directorate General of Hydrocarbon (DGH), approved the drilling of the development well of RIL at the KGD-6 oil and gas blocks off Andhra Pradesh.

Taking note of media reports about the ministry granting permission to RIL, the auditor has said the Petroleum Ministry is granting approval at a time when “the current ‘performance audit’ of the PSCs by us is at a standstill” due to the “lack of access to the records of the contractors of the KG-DWN-98/3 (KGD-6) and PMT PSCs”.

As far as RIL’s pre-condition that the CAG audit of the KG-D6 basin be kept within the Oil Ministry and not made public and tabled in Parliament, as is the procedure, the sources said the Petroleum Ministry is preparing a detailed reply refusing to accept the energy behemoth’s conditions. Officials in the Petroleum Ministry told NDTV that they are in process of sending a letter to RIL clarifying the areas that fall under the purview of an audit by CAG. The officials said “profit petroleum” is a non-tax revenue of the government, which can be audited by CAG under the CAG Act, with or without the consent of the contractor.

The Constitution mandates that the CAG table all audit reports of Union Accounts in Parliament, the letter being drafted by the ministry notes.

Earlier this month, the CAG had written to the Oil Ministry asking why it had agreed to RIL's restrictions. The auditor had also said the final audit report will be presented to Parliament, as mandated by law.

The conditions included RIL wanting the audit to be carried out in its own premises and that it would give no other documents apart from those prescribed in the KG-D6 contract.