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| ONGC Q1 net dips 24% to Rs 3,661 cr on higher subsidy burden | | | NEW DELHI: State-run Oil & Natural Gas Corporation (ONGC) today reported a decline of 24 per cent in net profit to Rs 3,661.14 crore for the first quarter ended June 30, 2010, over the same period last year, on higher subsidy payout.
The company had a net profit of Rs 4,847.92 crore in the same quarter of the previous fiscal, ONGC said in a filing to the Bombay Stock Exchange.
The company paid Rs 5,515 crore towards fuel subsidy in the April-June quarter 2010, against Rs 429 crore in the same period last year. ONGC is required to partially subsidise the sale of fuel to state-run retailers, who sell fuel at state set, below-market prices, which affects its profit. The government recently deregulated gasoline prices and has said it would free diesel prices as well, but clarity on the subsidy-sharing mechanism for other fuels is yet to emerge.
The total income declined to Rs 14,230.22 crore in the quarter ended June 2010, from Rs 15,924 crore in the same period of the corresponding fiscal.
The company's net realisation on crude sale was USD 48.04 per barrel, against USD 58.25 per barrel a year ago.
"Though the government has talked a lot about freeing prices, the mechanism by which the subsidy will be calculated has not emerged," Sonam Udasi, head of research at IDBI Capital, said. "Also, if oil prices go up again, then government intervention will start again," he said. India has asked state-run upstream firms to pay a subsidy of Rs 6,691 crore to retailers to compensate them for selling fuel at cheaper rates in the June quarter, an executive at Oil India said last week.
The company expects a hike in gas prices to add Rs 1500-1600 crore ($322-$343 million) to revenue a quarter, Chairman R.S. Sharma said on Thursday. ONGC shares fell 1.1 percent to Rs 1,242.50 ahead of the results.
ONGC and state-backed Petrovietnam are expected to submit a joint formal offer within weeks to buy BP's stake in the Nam Con Son gas project, India's oil secretary, S. Sundareshan, said on Tuesday.
On Thursday, ONGC's Sharma said the company has started talks with Petrovietnam to buy BP's Vietnam assets. ONGC is well positioned to buy the embattled UK firm's 35 percent stake, worth $966 million by one estimate, in the offshore Vietnamese gas field in which it already owns 45 percent. Vietnam insists BP give priority to its partners in the project. A deal would be a welcome change for India, which has been playing the underdog to China in the hunt for natural resources as the two Asian countries seek energy security to feed fast economic growth. |
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