The Hindu Business Line : ONGC asked to share Rs 2,830-cr subsidy burden in Q2

With this, the company will share a subsidy bill of Rs 5,706 crore during the first half of 2005-06. This is against a total subsidy bill of Rs 4,104 crore paid for the full year of 2004-05.

An ONGC official said that the high subsidy burden would take a toll on the company's profitability in the second quarter. ONGC registered a net profit of Rs 3,383 crore during the second quarter of the last fiscal.

"We are not expecting a decline in profits. However, the growth in profits may be affected due to the dual impact of a loss in production following Mumbai High North fire and the high subsidy burden."

The company had registered a 43 per cent rise in net profit in the first quarter of this year to Rs 2,308 crore even after paying a subsidy bill of Rs 2,876 crore.

The official, however, said that the spiralling crude price and Rs 105-crore payment of (maiden) dividend by ONGC Videsh would compensate a part of the loss in production during the quarter.

The Centre had earlier indicated that ONGC may have to bear a subsidy burden of approximately Rs 12,000 crore during the year against an estimated under-recovery of Rs 40,000 crore by the oil marketing companies.

The official however felt that the actual shortfall would be close to Rs 18,000 crore (following issue of Rs 12,000 crore worth oil bonds, Rs 5,500 crore from two rounds of price revision and Rs 5,000 crore discounts offered by the stand-alone refineries) and that it would be improper to pass on two-thirds to ONGC alone.

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