New Delhi: State-run Oil and Natural Gas Corp (ONGC) is likely to be exempted from subsidising domestic LPG and kerosene from this month as the steep fall in global crude oil prices has eroded the gains of the company.
Upstream companies ONGC, Oil India Ltd and GAIL India Ltd give discounts on the crude oil and petroleum products they sell to retailers, sharing at least 33% of the revenue loss on fuel sales to final consumers.
However, with crude oil plummeting from $147 a barrel in July to under $40 per barrel currently, ONGC has seen its fortunes decline as it sells the crude oil it produces at rates linked to internationally traded oil prices.
“The Petroleum Ministry sent a letter on 18 November informing ONGC and others that they will not have to give any discounts to Indian Oil, Bharat Petroleum and Hindustan Petroleum from the third week of November,” a Government official said.
ONGC, which shelled out Rs22,474 crore in the April-September period to subsidise fuel, had in October to mid-November given out discounts of another Rs3,693 crore.
It, together with OIL and GAIL, gave subsidies of Rs4,282 crore in the period (October to mid-November), taking the total payout this fiscal to over Rs30,000 crore.
When contacted, Petroleum Secretary R.S. Pandey said that upstream companies had petitioned the ministry against subsidy payout as their revenues had dipped steeply due to fall in international oil prices.
ONGC has seen its gross realisation on crude oil sales fall to one-third to $40-42 a barrel this quarter.
“Naturally the companies cannot take the Rs45,000 crore subsidy burden envisaged in June. The matter is under consideration,” Pandey said.