ONGC lost Rs 4,745 crore on gas sales in 2008-09

State-owned Oil and Natural Gas Corporation (ONGC) lost Rs 4,745 crore on account of selling natural gas below the production cost in 2008-09.

ONGC and state explorer Oil India Ltd (OIL) sell gas at government-controlled rates, called the APM (Administered Price Mechanism) price. The APM price for ONGC is Rs 3,200 per thousand cubic metres (or Rs 3.2 per unit).“In 2008-09, our cost of production was Rs 5.87 per cubic metres. Against this, our price realisation was just Rs 3.191 per unit,” a top ONGC official said. ONGC’s total revenue loss on the 17.71 billion cubic metres gas it sold at APM rates last financial year came to Rs 4,745 crore.

“The APM rates at Rs 3.2 (or $1.79 per million British thermal unit) were not even half of the presumed market rate,” he said, adding, “We will not breakeven on gas sales, even after the proposed increase in APM price is implemented.” Meanwhile, the company also said it would invest Rs 2,380 crore for repairing and revamping the company’s installation at Assam and had awarded the contract for the same to Sairama Megha Volgo.