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ONGC reports 6% drop in Q2 profit

Special Correspondent

Outgo on fuel subsidies jumped more than two-fold

— PHOTO: V. SUDERSHAN

TESTING TIME: R. S. Sharma, Chairman and Managing Director, Oil and Natural Gas Corporation, addressing a press conference in New Delhi on Thursday.

NEW DELHI: Oil and Natural Gas Corporation (ONGC) on Thursday reported a 6-per cent per cent drop in its net profit at Rs. 4,808 crore in the second quarter of the current financial year against Rs. 5,098 crore in the same period in the previous year as the outgo on fuel subsidies jumped more than two-fold Rs. 12,663 crore from Rs. 3,799 crore.

Addressing a press conference here, ONGC Chairman and Managing Director R. S. Sharma said in the absence of equitable and defined mechanism on subsidy discounts, the current ad hoc discount system was fast eroding commercial values.

Mr. Sharma said the gross realisation on crude oil sales in the second quarter was $119.39 a barrel, but after giving a discount of $72.67 to the refiners, the net realisation was $46.72. In the second quarter last year, the net realisation was $56.14 after giving a discount of $22.10 a barrel.

Upstream companies ONGC, Oil India and GAIL (India) have to bear one-third of the revenue loss that IOC, BPCL and HPCL suffer on sale of petrol, diesel, LPG and kerosene. Sales grew 13.10 per cent to Rs. 17,492 crore in the latest quarter. Crude oil production was marginally down at 6.853 million tonnes against 7 million tonnes last year. The gas output stood at 6.43 billion cubic metres as opposed to 6.35 BCM last year.

Mr. Sharma said the net profit in April-September period grew 17.90 per cent to Rs. 11,445 crore, while sales were up 28.9 per cent at Rs. 37,614 crore. The outgo on subsidies jumped to Rs. 22,747 crore in the first half.

The board had also approved a proposal for setting up additional process units at the Uran plant at an estimated cost of Rs. 1,797 crore. The project was expected to be completed in 38 months. He said ONGC had been declared the recipient of the prestigious Gold Trophy SCOPE meritorious award for good corporation governance for 2006-07 for the first time.

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