ONGC lowers net on govt directive

The unaudited net profit for 2004-05 now stands reduced to Rs 12,175 crore from Rs 12,725 crore announced on Wednesday. It is a 41 per cent increase over Rs 8,664 crore net posted in 2003-04.

Similarly, the turnover for 2004-05 is now pegged at Rs 46,025 crore, 40 per cent higher than Rs 32,927 crore posted in 2003-04.ONGC had till the end of the third quarter paid Rs 3,114 crore to Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation as its share of under recoveries.

The government in September 2003 worked out a subsidy sharing formula on the premise that upstream companies, which sold crude at import parity price to refining and marketing companies gained when there was a spurt in international prices.

Oil marketing companies (OMCs) end up with losses in LPG and kerosene since the government does not allow them to link the retail price to the international price.

Under the formula worked out by the petroleum ministry, one third of the projected under recoveries are met by cross-subsidisation of other products.

The remaining under recoveries of oil marketing companies is shared amongst them and the upstream companies "" ONGC, Gail India Ltd and Oil India Ltd.

Within the allocated sharing of burden of upstream sector companies, the contribution of ONGC and GAIL would broadly be in the ratio of each company's profit after tax in the previous year.

The contribution from upstream companies comes as a discount on prices of crude oil, LPG and kerosene supplied by them to different OMCs.