Budget Imact: ONGC profits to take Rs 5,000 cr hit

Oil & Natural Gas Corp’s profit before tax will take a hit of Rs 5,000 crore in 2012/13 due to budget proposals to raise duties on oil production, and an increase in service and other taxes, its chairman said.

The budget for the fiscal year beginning in April proposed to raise cess on crude oil to Rs 4,500 per tonne from Rs 2,500 per tonne.

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The state-run company has asked the government to adjust the extra burden from the budget against oil subsidies, Sudhir Vasudeva told reporters at an industry event.

The government subsidizes prices of diesel, kerosene and cooking gas to protect the poor from the impact of inflation pressures. This means producers such as ONGC must share the shortfall by selling crude to refiners at a discount.

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Because of the subsidies, the total revenue losses of India’s state-run oil companies are expected to rise to $28.5 billion in the fiscal year ending March, nearly double the amount in the previous year.

Reuters