ONGC to invest Rs 13,580 cr in exploration

95% of investments in domestic sector, won't pay special dividend: Raha.

Oil & Natural Gas Corporation (ONGC) Chairman Subir Raha today said the company would invest Rs 13,580 crore in exploration and production next year. He also countered Petroleum Minister Mani Shankar Aiyar's criticism, saying 95 per cent of ONGC's investment was in domestic exploration.

Saying that "there is no provision for a special dividend under the company law", Raha said ONGC had no plans to declare a special dividend but would consider an interim dividend for 2005-06. He also ruled out a stock split as the company had not got any advice from the government on the issue. Raha was speaking on the sidelines of a press conference on the forthcoming Indian Drilling Technology Conference and Exhibition.

The finance ministry had on November 23 asked state-owned companies with huge cash surplus and without firm plans for investment to declare special dividend and bonus shares. It had also asked public sector companies with a high share market price to consider stock split.

On the government asking ONGC to pay income tax on the invoice value of crude oil instead of the discounted value, Raha pointed out that the income-tax department had raised a tax demand of Rs 10,000 crore from the company for 2003-04.

"The income tax department wants tax on invoice value of crude oil (the gross price) and not at the discount price. But revenue earned is on the discounted price and not the invoice value, so tax should also be on discounted price," Raha said. ONGC is selling crude oil to refining companies at a discount of about $17 a barrel for the current year.

Raha said he expected ONGC's capital expenditure for 2006-07 to be Rs 14,000 crore compared with Rs 12,500 crore in the current year and Rs 10,400 crore in 2004-05.

He said the company's crude oil output was likely to be lower than the target during the current fiscal by 1 million tonne due to the fire at Mumbai High platform. ONGC is targeting domestic crude oil output of 26.9 mt this year.

Raha said the company's gas output had gone up marginally. So oil and oil-equivalent output for 2005-06 would be lower by less than one million tonne, he added. Raha also said he expected the Mumbai High oilfield to resume pre-accident level output of 275,000 barrels a day by March.