The Hindu Business Line : Subsidy payouts, weak dollar drive down ONGC net 18 pc

OIL and Natural Gas Corporation has recorded a net profit of Rs 8,664 crore on a sales revenue of Rs 32,180 crore during fiscal 2003-04. During the previous year, the corporation recorded a net profit of Rs 10,529.33 crore on a turnover of Rs 34,536 crore.

This translates into a 17.7 per cent drop in net profit and a 6.8-per cent fall in revenues during the period under comparison.

The drop in profits and revenues is largely attributable to the strengthening of the rupee vis-à-vis the dollar as well as ONGC's payout of Rs 2,690 crore to the downstream marketing companies during fiscal 2003-04.

The payout was on the directions of the Government to make good some of the losses that the public sector marketing companies suffered on account of non-remunerative sale of LPG and kerosene to consumers.

Addressing a press conference today, the ONGC Chairman and Managing Director, Mr Subir Raha, said: "Profit was lower because of subsidy of Rs 2,690 crore paid to Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd."

Although ONGC realised $29.95 per barrel of crude sold during fiscal 2003-04, roughly a dollar over the previous year's figures, the gains were lost on account of the appreciation of the rupee vis-à-vis the dollar as well as the subsidy payout.

While ONGC's crude production remained unaltered at 26 million tonnes during fiscal 2003-04, revenue from crude sale fell to Rs 22,536 crore from Rs 24,764 crore in 2002-03.

Crude sale contributes 69 per cent of ONGC's revenues, with gas sales accounting for 14 per cent and the value added products the rest.

While the subsidy hit and dollar depreciation are phenomena witnessed during fiscal 2003-04, there are other liabilities that ONGC has been carrying over the years.

"Besides the Rs 2,690-crore outgo to the refiners for meeting their LPG and kerosene subsidy, we also pay Rs 250 crore a year to gas pool account and Rs 800 crore to private and foreign explorers for difference between the artificially low domestic gas price and the market price," Mr Raha said.

ONGC also picks up a bill of Rs 50 crore annually towards payment of cess and royalty on behalf of private and foreign firms. Further, ONGC supplies around Rs 385 crore of free feedstock (C2, C3 fractions) to GAIL for its petrochemical plants.

Mr Raha lamented that the company loses around Rs 10,000 crore every year on account of controlled pricing of gas. The current producer price of Rs 2,150 per thousand cubic metre was just 33 per cent of the fuel oil price whereas the company ought to be remunerated 100 per cent parity with fuel oil pricing.

ONGC posted a net profit of Rs 1,986.36 crore on an income of Rs 8,787.1 crore for the quarter ended March 31, 2004 as compared to a profit of Rs 3,678.4 crore on an income of Rs 12,825.1 crore in the corresponding period in the previous year.

The ONGC board declared a total dividend of Rs 24 per share, inclusive of Rs 14 paid earlier as interim dividend.

According to Mr Raha, the ONGC group, comprising ONGC and its subsidiaries ONGC Videsh Ltd (OVL) and Mangalore Refinery and Petrochemical Ltd (MRPL), posted a consolidated net profit of Rs 9,380.26 crore on an income of Rs 45,891.23 crore for fiscal 2003-04 as against a profit of Rs 10,467.46 crore on a turnover of Rs 36,578.26 crore during the previous fiscal.