ONGC registers Rs 4,000 crore loss on gas production due to cap on fuel prices, says senior company official
State-owned Oil and Natural Gas Corp (ONGC) logged a Rs 4,000 crore loss on natural gas output in the fiscal year ended 31 March, 2018 as the government mandated price for the fuel was less than the cost of production.
In a boost to firms like ONGC and Reliance Industries, the Cabinet today approved a new price formula for their undeveloped gas discoveries in difficult areas, which will lead to a near-doubling of rates.
In a boost to firms like ONGC and Reliance Industries, the government plans to raise natural gas price by about 60 per cent for their undeveloped gas discoveries in difficult areas.
The lower prices will reduce the government's earning from royalty by about Rs 60 crore.
The price cut today is the second reduction in rates ever - the first being on 1 April.
While announcing a 33 per cent hike in natural gas priceto USD 5.61, the government had on October 17 said that RIL will continue to get the old rate of USD 4.2 for the mainD1&D3 gas field in KG-D6 block.
The new natural gas price of USD 5.61, which is already among the lowest in Asia Pacific, is likely to drop to around USD 5 per unit in three years due to the variables included in the formula, Goldman Sachs has said.
Every $1 rise in gas price increases ONGC's revenues by Rs 4,000 crore and net profit by Rs 2,350 crore
Energy giants led by Reliance Industries, ONGC, BP and Cairn India today unanimously demanded an immediate hike in natural gas prices.
Chief spokesperson of Delhi BJP Sanjay Kaul today said Kejriwal's reported statements at a rally in Delhi suggesting that he was in possession of a letter signed by Narendra Modi seeking a gas price hike was a "blatant lie".
Coming down heavily against Delhi Chief Minister Arvind Kejriwal for ordering an "unconstitutional" FIR against him and others for raising gas prices, Oil Minister M Veerappa Moily today said the government will not go back on its decision to hike rates from April 1.
Shares of Reliance Industries Ltd today lost over 1 percent after Delhi Chief Minister Arvind Kejriwal ordered filing of criminal cases against the company's chief Mukesh Ambani and others on alleged irregularities in gas pricing.
Moily said the LNG prices in the Asia-Pacific region are significantly higher than that in North America and UK/Europe.
He said price hike was not due to inefficiency of the government but because of the fact that India imports 80 per<br /><br /> cent of its fuel requirements
Dismissing reports that RIL is seeking a three-fold hike in gas price, RIL alleged that some vested interests were trying to create a needless controversy on the issue