The Hindu Business Line : ONGC asks Centre to refund Rs 2,690 cr

OIL and Natural Gas Corporation Ltd (ONGC) has asked the Centre to refund Rs 2,690 crore, its share of cooking gas and kerosene subsidies, that it was asked to bear along with oil refining and marketing companies in 2003-04.

The subsidy burden brought down ONGC's net profit by 17.7 per cent in the last financial year. But despite claiming that the subsidy burden on them was heavy, IOC's net profit jumped 15 per cent to Rs 7,000 crore, BPCL's profit surged 36 per cent to Rs 1,700 crore, and HPCL's profit rose 24 per cent to Rs 1,900 crore in 2003-04, Mr Subir Raha, Chairman and Managing Director, ONGC, told presspersons here.

"I have written to the Government asking for a refund of the subsidy burden that ONGC had to bear. It is obvious that the oil companies can themselves sustain the loss on LPG and kerosene sale," Mr Raha said. The Union Government asked ONGC and Gail (India) to share one-third of the Rs 7,200-crore loss that retailers IOC, BPCL and HPCL had to suffer on selling cooking gas and kerosene below cost. It has not yet indicated whether ONGC will have to bear subsidy losses again this year. As international oil prices remain high, it is clear that losses on subsidised sale of cooking gas and kerosene will mount.

ONGC has already lost Rs 30,000 crore over the past four years up to March 2004 because it sells natural gas at a subsidised price. According to Mr Raha, it is unlikely that ONGC will be burdened with LPG and kerosene subsidies again this year.

The Government representatives had assured prospective investors during the March road-show to sell a part of its equity holding in ONGC that subsidy-sharing was not part of Government policy and the decision was only for the financial year 2003-04."Ideally, investors would like if none of the companies have to bear the burden of subsidy. Although there is no legal recourse to an investor if the Government goes back on its word, and the company that an investor invests in has to bear losses, investors can always sell out," said an official of a foreign institutional investor.