ONGC net down 32% on subsidy

As lower average crude oil prices and a higher subsidy burden weighed on profits

A 115 per cent jump in the subsidy burden has pulled down ONGC’s net profit 31.8 per cent in the September quarter. Net profit was Rs 5,897 crore against Rs 8,642 crore in the same quarter last year. Revenue dipped 12.5 per cent to Rs 19,853 crore.

Chairman Sudhir Vasudeva said: “The sharp increase in subsidy is the single reason behind the drop in profits”.

Under the government’s subsidy burden sharing mechanism, the company contributed Rs 12,330 crore to compensating partly the revenue loss of oil marketing companies on diesel, kerosene and domestic LPG. In the last year’s corresponding quarter, the company had contributed Rs 5,713 crore. The subsidy outgo has pulled down the net profit Rs 7,103 crore.

The government-owned firm realised $46.8 on a barrel of crude after giving discount of $63. Last year same quarter, it had realised $82.6 a barrel after a discount of $33. The company’s crude output dipped 8.2 per cent to five million tonnes while gas output rose 1.2 per cent to 5,898 million standard cubic metres. ONGC notified 14 new oil and gas discoveries in the first half of the year.

Vasudeva said the low net realisation is a matter of concern for the company since operating cost is going up by 7 per cent every year. “We are barely hand to mouth and not generating surplus for the company”.