ONGC's subsidy bill likely to drop: SharmaBS Reporter / New Delhi July 20, 2007The government has agreed to make allowance for exchange rate losses while calculating the subsidy burden to protect the interest of crude oil producers like Oil and Natural Gas Corporation (ONGC)."We have been given a clear assurance that the impact of the appreciating rupee will be taken into account when subsidies for ONGC are calculated," R S Sharma, chairman and managing director, ONGC said.Sharma said that every one rupee rise against the dollar results in about a Rs 900 crore loss in revenue to the company on an annualised basis. The rupee has strengthened from around 45 to the dollar, in the beginning of this year, to around 40. The near-Rs 5 appreciation against the dollar would result in the company losing around Rs 4,500 crore. ONGC is paid in dollars for the crude oil it sells to marketing companies - Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL). With the price of crude oil hovering around $72 per barrel, ONGC is getting a high price for the crude oil. However, it is ending up with less revenue as it converts its dollar payment into rupees.For the retailers, which buy crude oil for processing in their refineries, the impact is just the opposite as an appreciating rupee has meant they are spending lesser rupees to buy crude oil even though the prices have remained high."Although the gross price for crude oil is $70 per barrel this quarter (it earned $66.33 per barrel during the last financial year), the net realisation in rupee terms at Rs 20,524 per tonne dipped from Rs 21,900 per tonne earned last year," Sharma said.Meanwhile, ONGC
