ONGC net drops 24% on subsidy burden

State-owned Oil & Natural Gas Corp (ONGC) has reported a 24% drop in net profit for the quarter ended June because of higher subsidy payments and foreign exchange loss on purchase of crude.

Net profit dropped to Rs 13,710 crore from Rs 14,922 crore a year ago. The company suffered a loss of Rs 862 crore during the quarter on account of foreign exchange.

The lower profit was mainly on account of an over 12-fold jump in subsidy burden during the quarter.

The company paid a subsidy of Rs 5,515 crore to oil marketing companies in April-June as against Rs 429 crore in the same period last year.

“During this quarter, the amount of subsidy we gave to oil marketing companies rose by about 12% as compared to what we paid to those companies during the same quarter last year,” said ONGC chairman and managing director R S Sharma.

The company received Rs 539 crore from gas sales during the quarter.

“We expect gas prices (post hike in prices) to add Rs 1,500-1,600 crore to company’s revenues in the coming quarters,” Sharma said.

The firm, which currently produces about 62 million metric standard cubic metres per day (mmscmd) of gas, expects to produce 100 mmscmd by 2016, Sharma said.

Meanwhile, ONGC is close to finalising a partner for its gas block in the Krishna Godavari basin, Sharma said. Earlier Norway’s Statoil and Brazil’s Petrobras had decided to quit ONGC’s east-coast gas block.

NewsWire18