RIL agrees to CAG audit as 'exception'

NEW DELHI: Mukesh Ambani's Reliance Industries Ltd has agreed to a special audit by the comptroller and auditor general (CAG) of its Andhra
offshore (KG-D6) contract, but said it hopes this will be a one-off case. In a letter conveying its `no objection' to such an examination by the government's auditor, the company told the oil ministry it hopes "this is a one-time exception which does not create a precedent for the future".

Minutes of the meeting notes RIL stating that though the PSC (production sharing contract) does not allow special audit, it was willing to accept a CAG audit for the ensuing year but not 2006-07. It said it did not understand the "scope" of such an action "since audit upto 2006-07 has already been conducted by the government-appointed auditors and RIL has been supplying all information required by DGH from time to time".

The government officials responded by telling RIL that the special audit has been ordered under Section 1.9.1 of the accounting procedures in the PSC. Asked for its reaction, RIL said, "The inference that RIL has agreed for a special audit under the insistence of government is totally incorrect and unwarrated. There is no difference between the letter by RIL and the minutes as far as RIL's position under the PSC is concerned.

However, RIL has accepted the audit voluntarily, as a one-time exception without creating any precedence, for the sake of transparency and cooperation with the government. This is clearly reflected in the minutes and the decision in the meeting which was confirmed by RIL in its letter."

RIL wrote the letter on August 17 after a meeting with officials from the ministry and Directorate-General of Hydrocarbons. The meeting was called in the backdrop of CAG denying a recent posting on DGH's official website claiming the auditor has completed audit of the Andhra offshore field. CAG also said it was having problems with accessing books of oil/gas field developers, although it did not point out RIL.

The government had in November 2007 ordered a special audit of eight contracts, including RIL's, which involve substatial financial stakes for the government.