CAG to conduct audit on RIL’s AP gas field

The Comptroller and Auditor General (CAG) is likely to carry out a performance audit similar to its first round rather than limit itself to scrutinizing the financial accounts of Reliance Industries Ltd's (RIL) Andhra offshore gas field. CAG sources said its auditors have the mandate to examine all aspects of government's policy implementation. 

 

Explaining the importance of a performance audit, the sources said the second round of audit could quantify possible revenue losses to the exchequer in view of the mismatch between the approved capital expenditure and drastic shortfall in gas output target. 

 

The ministry ordered the second round of CAG audit after the field's output fell to less than half of the targeted 60 mcmd (million cubic metres per day) for which investments were approved. The contract with the government allows RIL to recover its investments and operational expenditure before sharing revenue with the exchequer.

CAG sources said any mismatch has a bearing on government revenue and needs to be examined. Ever since the audit was ordered, a dispute between RIL and the ministry arose over the format. The company cited terms of its contract and raised points of law to oppose a performance audit by CAG. But it agreed to a CAG audit of its financial accounts. 

The ministry initially opposed RIL's contention and held back approvals for future investments in the field to put pressure on the company. 

On October 23, however, it informed the company that CAG would conduct the audit in accordance with the provisions of RIL's contract with the government. 

The ministry for petroleum and natural gas has also directed RIL to furnish all requisite documents in connection with the audit to the auditors. CAG sources said the auditor will look into profits accruing to the private company out of the gas productions and sales made from these blocks for a three-year period up to 2011-12.  (TNN)