ONGC on Thursday said its second quarter 2012-13 net profit has dropped by 31.8 per cent on account of a higher subsidy outgo. The company reported a net profit of Rs 5,897 crore against Rs 8,642 crore in the same period previous year.
ONGC Chairman Sudhir Vasudeva said: “It is a matter of concern. We have raised the concern about higher subsidy at the Prime Minister’s and Cabinet Secretariat level.”
In the second quarter of 2012-13, ONGC paid a subsidy of Rs 12,330 crore, against Rs 5,713 crore in the same period previous year.
ONGC sold every barrel of crude oil at $109.85 during July-September 2012. However, after a discount of $63.05 per barrel, the net realisation dropped to $46.8, Vasudeva said.
ONGC says it requires a net realisation of at least $55-56 for every barrel to support its capital expenditure plans.
If the public sector oil explorer continues to pay higher subsidy, its cash reserve, which at the start of the fiscal was Rs 12,000 crore, would drop to nearly Rs 4,500 crore by end of fiscal, Vasudeva said.
The higher subsidy has impacted ONGC’s profit after tax by Rs 7,103 crore in the second quarter, the company said.
ONGC produced 8.2 per cent less crude oil during the second quarter of this fiscal, at 5.103 million tonnes against 5.557 million tonnes in the same period last year.
Gas production increased marginally by 1.2 per cent, at 5,898 mmscm, during July-September 2012 against 5,827 mmscm in the same period last year.