Reliance Industries disappointed at CAG’s dismissal of audit report response

<p>Reliance Industries Limited (RIL), India’s largest private sector enterprise, has been let down by Comptroller and Audit General (CAG) body for not considering the response it submitted to CAG’s audit draft report on RIL’s KG-D6 gas fields. RIL Senior Vice President (Commercial) Mr. B Ganguly noted that the letter sent on behalf of Reliance Industries to CAG and oil ministry, highlighting clarifications for CAG’s findings, has not been acknowledged by the audit body in its process of finalization of audit report.</p>
<p>At the Exit Conference held on July 12, CAG did not raise any issues or sought clarification from RIL on any of its audit findings.  However, just days before the CAG is slated to submit its final draft to the parliament, the draft notes no mention of Reliance’s elucidations. B Ganguly said, “What is surprising is that in spite of many issues having been clarified by RIL during the Exit Conference (held on July 12) as well as in its written responses, the record of the Exit Conference as minuted appears to take no cognizance of the reasons put forward by the operator. In case the CAG disagrees with out reasons our technical observations or our interpretation of the PSC, the reasons for such disagreement may also be made known.”</p>
<p>Earlier in June, CAG slammed the oil ministry and its technical arm Directorate General of Hydrocarbons (DGH) for allegedly allowing RIL to increase its capital expenditure on its KG-D6 gas fields in violation of the Production Sharing Contracts (PSCs). In retort to this claim, RIL has held that an increase in cost does not border on ‘benefits’; only when an operator incurs low capital expenditure that the profits increase. So far, CAG had not been able to quantify its claim of inflated costs and, according to RIL representatives, the report failed to acknowledge the increase in exploration costs over the last few years for all oil and petroleum exploration and development operators around the world. The shift in global cost patterns have equally affected the exploration and development processes of KG-D6 basin, which CAG has put under the scanner in its audit.</p>