Private firms not against CAG audit, says oil secretary GC Chaturvedi

NEW DELHI: Private firms engaged in exploration and production of oil and gas in India have not objected to audit of their accounts by the Comptroller & Auditor General ( CAG), but the decision to audit their records rests with the top auditor, oil secretary GC Chaturvedi said.

“As per the production sharing contract (PSC), the government can request for the audit, but it depends on availability of CAG’s manpower,” Chaturvedi told reporters on the sidelines of a conference organised by Ficci. The government signs PSCs with winning bidders of oil and gas exploration blocks under the new exploration licensing policy (Nelp), which guide affairs of the blocks.

Initially in 2007-08, CAG had rejected the government’s request to conduct special audit of certain producing blocks, including Reliance Industries-operated KG-D6 gas field, Cairn’s Rajasthan oil block and Panna, Mukta and Tapti fields of BG-led consortium. Later, the then oil minister Murli Deora could persuade the top auditor to conduct special audit, which companies initially resisted. But the ministry forced them to share records with CAG officials.

Top executives of private and government-run firms present in the Ficci meeting said that the draft report of CAG, leaked in media this year, had created a fear psychosis among bureaucrats, leading to policy paralysis in the oil ministry. But the CAG dropped several audit objections in its final report in September, after being satisfied by replies of the oil ministry.

“Files move from one table to the other. So much so that DGH (the Directorate General of Hydrocarbon) seeks approval of the oil ministry before giving any advice,” the chief executive of an energy firm said requesting anonymity. DGH is the technical arm of the oil ministry, which facilitates government’s decision-making on highly technical matters such as estimates of oil and gas reserves and capital expenditure.