DGH embarks on mass audit of PSCs
EXPLORERS BEWARE! The DGH is about to embark on an audit of India's producing fields to make sure you are not short-changing the government on its share of profit petroleum.
On 3rd June, the regulator floated a tender for reputed auditors to audit the finances of 31 exploration blocks and 10 developed fields. We need to scrutinize the inflated costs submitted by many exploration firms, reveals a source.
This is to ensure that profit petroleum and other statutory payments like the royalty and cess figures tally with those submitted by the company in its balance sheet. Under every PSC, the government is equipped with a right to conduct an external audit of the finances for development of a given block.
The DGH conducts this audit every two years. Whatever a company spends on exploration and development is recoverable in the form of costs," adds our source.
"So it's very important for us to be vigilant on the finances." If the external auditors are not convinced, then the government will not approve the particular company or consortiums bills. The DGH tender is in two parts: for the 31exploration blocks it wants accountants who have been approved by the Comptroller and Auditor General of India while for the 10 developed fields the regulator prefers to hire the services of international chartered accountant firms, registered in India of course.
The tender warns: Firms who have audited a particular PSC in the last five years will not be eligible for the same PSC or block. The last date for submission is 25th June at 2pm and bids will be opened an hour later on the same day.
PriceWaterhouseCoopers, KPMG, Ernst & Young and Deloitte Touche Tohamatsu were among the firms that submitted bids when the DGH carried out a similar audit two years ago.