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dna special: Unresolved issues could stall audit of KG Basin, again

Wednesday, 15 May 2013 - 8:10am IST | Place: New Delhi | Agency: dna

The ongoing audit of Reliance Industries limited (RIL) by the CAG in the KG basin gas exploration case could come to a grinding halt again as some issues still remain unresolved.

RIL allowed the CAG to begin the audit in April this year after stalling it for a year.

However, a company representative told dna that if the unresolved issues come up, the audit would be stalled again.

The issue has been simmering for more than a year and even Comptroller and Auditor General of India Vinod Rai had to personally step in and shoot off a strongly-worded letter to get the audit going. He wrote to union petroleum minister Veerappa Moily on February 14, 2013 detailing how RIL was denying records to his officers for over a year due to which audit had been suspended. Rai pointed out that they were doing the audit because the government had asked them to do so.

“My principal audit officers began the current audit in May 2012 and had planned to commence field audit at various blocks by end-May and early June 2012. Our audit had, however, to be suspended since May 2012 as the concerned operator [RIL] of the KG-DWN-98/3, in particular have stonewalled our efforts to commence audit,” he wrote.

Rai was most upset that “not only has access to records been denied but the operator has tried to constrain by putting forth restrictive conditions which would impinge upon the basic mandate, rights and obligations of audit under CAG’s (DPC) Act, 1971”.

Given the large stake of the government in financial terms, the audit is necessary to access the compliance by RIL with the terms and conditions of the production sharing contract (PSC) signed with the company. “...It is imperative that my organisation is able to complete the audit and provide assurance to parliament regarding the effectiveness of protection of government’s interest through mechanism of profit sharing as envisaged in the PSCs,” he said.

In fact, Rai sought Moily’s personal intervention in the matter to ensure access to RIL’s records as repeated efforts by officials of CAG and MoPNG to persuade the company to provide them complete access to documents, have gone in vain.

Rai’s letter said, “In spite of repeated reminders and personal interaction of my principal audit officers with the ministry, the operator of KG-DWN-98/3, namely RIL have not provided them access to records. Significantly, the operator has also stone-walled the efforts of the ministry to start the process of audit.” As a reference, Rai attached correspondence exchanged between CAG officials, ministry and RIL which supported his letter.

RIL’s official spokesperson Tushar Pania has not responded to a detailed questionnaire dna sent to him a week ago.

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