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CAG gets set for new oil & gas audit

business Updated: Aug 03, 2011 01:07 IST
Anupama Airy
Anupama Airy
Hindustan Times
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Though the dust is yet to settle on a welter of irregularities suggested by the Comptroller and Auditor General (CAG) of India in its first draft report on petroleum exploration by leading private companies, the government’s independent auditor is on to its next round.

It is moving to audit oil and gas companies to verify if the government's revenues coming out of their production to see if they are being correctly calculated by the companies. In the new round covering the 2007-08 and 2008-09 fiscal years, the CAG will scrutinise the books and records of companies including Cairn India, ONGC, Selan Exploration, Joshi Technologies and Niko Resources.

“The purpose of access to the records of operators is primarily to verify whether the government's revenue in the form of profit petroleum (current and future) and royalty is correctly calculated and its revenue interests are properly protected,” the CAG said in a letter dated July 19 to the government.

The government gets revenues come in the form of profit petroleum(that oil companies agree to pay in cash while signing a contract for these blocks and after the production begins) besides royalty payments from petroleum production.

Reliance Industries-owned KG-D6 — India’s largest gas producing field — is not covered under the audit as the company started gas production only from April 2009. “The CAG’s audit covers the period two years prior to this date,” said a senior petroleum ministry official.

In order to prevent a situation where the companies complained that the auditor did not give them sufficient time to give their comments, the CAG is scheduled to hold an entry conference with the operators on Wednesday.

The CAG said it has already communicated the detailed audit approach to the companies and asked them to make available the “list of records to CAG office by August 9, 2011.”