The government will provide for exchange rate losses while
calculating subsidy burden on oil producers like Oil and
Natural Gas Corporation (ONGC), R S Sharma, chairman and
managing director, said.
have been given a clear assurance that the impact of the
appreciating rupee will be taken into account when subsidies
for ONGC is calculated," Sharma said.
is paid in dollars for the crude oil it sells to marketing
companies - Indian Oil (IOC), Bharat Petroleum (BPCL)
and Hindustan Petroleum (HPCL).
said ONGC loses about Rs900 crore annually for every one
rupee rise against the dollar. The rupee has strengthened
from around 45 against the dollar in the beginning of
this year to around 40 at present. This translates to
a loss of around Rs4,500 crore for the company, he pointed
Sharma, however, said ONGC''s subsidy burden in the April-June
quarter is likely to be lower than the Rs5,120 crore paid
out in the same period of the previous financial year.
are given to understand that the actual losses to retailers
on fuel sale and the actual rupee earnings of ONGC will
be taken into account when the subsidy sharing is decided,"
Oil, Bharat Petroleum and Hindustan Petroleum make huge
losses on sales of petrol, diesel, LPG and kerosene as
the government, for political compulsions, have not allowed
them to raise retail prices in line with rise in global
crude oil prices.
losses are equally divided between the retailers, the
government (through bonds) and upstream companies such
as ONGC, Oil India and GAIL.
the high price of crude oil, which is hovering around
$72 per barrel, ONGC is expected to end up with less revenue
as it converts its dollar payment into rupees.
stronger rupee, on the other hand, may help the retailers
who buy crude oil for processing as they spend less in
terms of rupee even though the crude oil prices are high.
though the gross price for crude oil is $70 per barrel
this quarter (higher than the $66.33 per barrel earned
during the last financial year), net realisation in rupee
terms at Rs20,524 per tonne is lesser than Rs21,900 per
tonne earned last year," Sharma said.
the government could also reduce the subsidy ONGC hands
out to downstream companies to compensate it for a stronger
rupee, Sharma pointed out.