ONGC slapped with record Rs56,384 crore subsidy burden
23 May 2014
State-run explorer Oil and Natural Gas Corporation (ONGC) will have to pay a record Rs56,384 crore share in the Rs67,021.14 subsidy burden allocated to state-owned oil and gas producers. ONGC will be paying 14 per cent more than the Rs49,421 crore subsidy payout in the previous (2012-13) fiscal.
The government has asked state-run explorers Oil and Natural Gas Corp (ONGC), Oil India Ltd (OIL) and GAIL to shell out Rs67,021.14 crore to cover about 48 per cent of the over Rs140,000 crore loss to state-run oil retailers in the subsidised sale of diesel, cooking gas and PDS kerosene in the 2013-14 financial year.
OIL has been asked to pay 11 per cent more subsidy at Rs8,736.85 crore while GAIL's subsidy output has been reduced by 30 per cent to Rs1900 crore because it no longer gets subsidised feedstock for manufacturing LPG.
The government will chip in with Rs70,772 crore by way of cash subsidy and the remaining is met through cross subsidies from upstream companies.
The government subsidy to fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) will cover part of the losses they incurred on the subsidised sale of diesel and cooking in 2013-14.
State-run oil marketing companies sell diesel, domestic cooking gas (LPG) and kerosene at rates way below cost.
The government is reported to have paid oil retailers a total of Rs35,772 crore as subsidy for the first three quarters in cash and is expected to pay another Rs35,000 crore for the fourth quarter ended 31 March 2014.
Of the additional subsidy, IOC will get Rs18,504.62 crore, HPCL Rs6,938.46 crore and BPCL Rs9,556.92 crore. For the fiscal 2013-14, IOC will get Rs37,182.27 crore in cash subsidy, HPCL Rs15,215.45 crore and BPCL Rs18,374.28 crore.
ONGC says its 2012-13 net profit should have been Rs49,339 crore and not Rs20,926 crore as reported earlier, had it not paid fuel subsidies.
The government subsidy and upstream support should help fuel retailers report healthy profits for 2013-14 when they report earnings next year.
IOC and BPCL are scheduled to report fourth quarter and 2013-14 earnings on 29 May, while HPCL will do so on 28 May. Gas utility GAIL will announce its earnings on 26 May and ONGC on 29 May.