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Business Daily from THE HINDU group of publications Saturday, Jul 21, 2007 ePaper |
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Petroleum Corporate - Outlook
Some relief: Mr R.S. Sharma (right), Chairman and Managing Director, ONGC, and President of Global Compact Society of India, with Mr Uddesh Kohli, Chairman, Consultation Development Corporation and Executive Member, GCS, at the third annual general meeting of GCS of India in the Capital on Friday.
Our Bureau New Delhi, July 20 ONGC may have to shoulder lesser burden of fuel subsidies, with the Government agreeing to consider exchange rate losses while calculating the subsidy burden the upstream oil companies have to bear. “The Government has assured that the impact of rupee appreciation vis-À-vis dollar will be taken into account when subsidy burden for ONGC is calculated,” Mr R.S. Sharma, Chairman and Managing Director, ONGC, said. Speaking to newspersons on the sidelines of ‘Third Global Company Society (India) annual general meeting’ here, he said, “ONGC’s subsidy burden in the first quarter (April-June) of this fiscal was likely to be lower than Rs 5,120 crore it paid on this account in the same period last fiscal.” The upstream companies have to share the subsidy burden to partially offset the revenue losses suffered by the state-owned oil marketing companies for selling petroleum products below the cost price. The burden is equally divided between the retailers, the Government (in the form of oil bonds and subsidy on LPG and kerosene) and upstream companies - ONGC, Oil India and GAIL (India) Ltd. Elaborating Mr Sharma said every one rupee appreciation vis-À-vis dollar results in revenue loss of about Rs 900 crore to ONGC. The upstream major is paid a dollar price of crude oil it sells to Indian Oil Corporation, Bharat Petroleum Corp, and Hindustan Petroleum Corp. “Even though ONGC is getting higher price of crude, it is ending up with lower revenues when dollars are converted into rupees,” he added. Impact on retailers
For retailers this impact is opposite, the appreciating rupee has meant that their losses on fuel sales are cut to almost half. “We are given to understand that the actual losses to retailers on fuel sales and the actual rupee earnings of ONGC will be taken into account when the subsidy sharing is decided,” he said. “Even though gross price for crude oil sale is $70 a barrel – higher than $66.33 a barrel earned for the 2006-07 fiscal – the net realisation in rupee terms at Rs 20,524 per tonne was lower than Rs 21,900 per tonne earned last year,” he said. Last fiscal, the total under recoveries suffered by the oil marketing companies was Rs 49,387 crore, of which upstream companies forked out Rs 20,498 crore. ONGC’s contribution stood at Rs 17,024 crore last fiscal. In the first fortnight of July of the current fiscal, the oil marketing companies were losing Rs 5.90 per litre on petrol, Rs 4.80 per litre on diesel, Rs 14.65 per litre on kerosene, and Rs 189.15 per cylinder on cooking gas. The total under realisation for the current fiscal is estimated at Rs 55,000 crore due to surge in international crude prices.
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