Subsidies, lower prices hurt ONGC net
ONGC, the country’s largest oil explorer has reported a 3% fall in its net profit for the fiscal year ended March 31, 2009, at Rs16,126 crore compared with Rs 16,702 crore in the previous fiscal.
Its profit for the fourth quarter of FY09 dropped 16%, mainly due to huge subsidy burden and lower crude prices. ONGC’s subsidy contribution for the year rose about 28% to Rs28,225 crore from Rs22,001 crore in FY08. “The impact of the subsidy on net profit was Rs 15,798 crore,” ONGC chairman & managing director RS Sharma said.
Other reasons for the lower profit were higher exploration commitment, temporary production set-back, an exceptional provision for Rs860 crore and higher rig rates. It paid Rs860 crore in additional profit for Ravva oil and gas field as demanded by the government from the operator, a consortium of Cairn and ONGC.
Although the government had assured ONGC that it would not be required to bear any subsidy burden in Q4, the company had to pay a subsidy bill of Rs852 crore for the quarter. In addition to the Rs28,225 crore subsidy, the company lost Rs3,000 crore in FY09 by selling natural gas below cost.