The government is yet to reach a decision on the kind of audit the Comptroller and Auditor General (CAG) would do in case of Reliance Industries' KG-D6 block. The auditor has been at loggerheads with RIL over doing a field examination instead of auditing the production sharing contract (PSC) through the books of the company.
While CAG does not conduct performance audit of private operators, it can do a performance audit of PSCs, covered under section 16 of the CAG's Act. "Profit Petroleum is non-tax revenue credited to the Consolidated Fund of India and such audit would involve examination of all records including those of the operator which are relevant to our audit," an earlier statement by CAG said.
The petroleum ministry is expected to have a meeting with CAG and RIL to resolve this matter after the last such meeting got cancelled. "The meeting was called at an official level to discuss the procedural issues of audit by CAG and due to administrative inconvenience, it was postponed on October 26, 2012 itself," a press statement by the oil ministry said.
In November 2007, CAG was requested to conduct a special audit of PSCs for eight blocks from where revenue is generated. CAG had initiated the audit of four blocks for financial year 2006-07 and 2007-08 and gave its report in August 2011, under examination by Parliament's Public Account Committee.
In May 2012, it was decided that CAG would undertake an audit for the year 2008-09 to 2011-12. An oil ministry statement said RIL had raised apprehensions regarding this audit and expressed their desire to discuss the issue further.
"The issues are likely to be finalised in the next few weeks," the statement mentioned earlier. CAG cannot go ahead with this second phase of audit till it gets access for field inspection, still a bone of contention. Since CAG does not interact with the "representatives of audited entities," the matter has to be resolved by the ministry.