New Delhi, Dec. 1
THE Oil and Natural Gas Corporation (ONGC) has disputed the Tax Department's additional claim for the payment of about Rs 1,000 crore for 2003-04 and has sought a legal opinion to contest the claim, the ONGC Chairman and Managing Director, Mr Subir Raha, has said.
The tax authorities have asked the company to pay its tax on the price realised for the sale of crude before offering discount. ONGC pays tax only on the net realisation after it discounts the liquefied petroleum gas (LPG) and kerosene subsidy payout it has to make to refiners through a trade discount in the price. Income tax authorities now want the company to pay tax on price before the discount, he said.
The Income Tax Department has claimed that ONGC's tax returns should be billed on the invoice value and not on the discounted rate at which the company sells crude to the refining and marketing companies.
Decision on interim dividend soon: Speaking to newspersons at the sidelines of a press meet to announce `Indian Drilling Technology Conference' to be held next year, Mr Raha said that the ONGC board is expected to consider payment of interim dividend for 2005-06 soon. (The company has been asked to consider payment of interim dividend for this fiscal by the Government.)
"We have an advisory for payment of interim dividend. Our board will meet soon to decide on the issue," Mr Raha said. When asked if the Government had asked ONGC to go for a stock split, he said, "We have no advise for stock split."
ONGC has been at the receiving end of the Petroleum Ministry's ire recently for its diversification plans, even as the output from its existing fields is expected to drop sharply.
Asked to comment on the issue, Mr Raha said, "ONGC has accelerated its exploration and production (E&P) investments and expects the output to increase. Our exploration investment has more than tripled and has reached the optimal level."
The company's integration plans, which involve forays into liquefied natural gas (LNG) imports, petrochemical plants and power projects, have no impact on its E&P spending. "We have sufficient internal resources to meet all our commitments for E&P," he said.
Almost 95 per cent of ONGC's Rs 14,000-crore investments next fiscal would go into a domestic oil hunt. This would raise oil output by 8 per cent, Mr Raha said. ONGC has raised its capital expenditure from Rs 10,600 crore in 2004-05 to Rs 12,000 crore this fiscal (2005-06).
"This year, our oil production will be lower by one million tonnes (mt), as we lost a crucial oil facility in fire at Mumbai High fields. We plan to restore oil production from Mumbai High field to pre-fire levels of 275,000 barrels per day by March 2006 and next fiscal output will see a rise."
ONGC will produce 26.88 mt of crude oil in 2005-06, down from 28.13 mt last year, and is projecting an output of 29.09 mt next fiscal. Of the Rs 12,000 crore being invested in E&P in 2005-06, one third is going into exploration (finding new fields) and the remaining two-third into production putting new fields on production and increasing production from existing ones, he said.