Date:14/07/2005 URL: http://www.thehindubusinessline.com/2005/07/14/stories/2005071403060100.htm

Back ONGC to be worst hit under subsidy sharing

Our Bureau

New Delhi , July 13

OIL and Natural Gas Corporation (ONGC) will have to bear the maximum burden under the subsidy sharing formula being worked out by the Petroleum Ministry.

The Ministry is understood to have asked ONGC to pay Rs 2,870 crore for the first quarter of the current fiscal to state-owned oil marketing companies (OMCs) as compensation for subsidised sale of petroleum products.

This in effect means that ONGC will be shouldering almost 88 per cent of the total subsidy burden of over Rs 3,250 crore.

According to sources, by this calculation ONGC may end up paying an amount close to Rs 12,000 crore for this fiscal. "This subsidy burden translates into a subsidy of $15.5 per barrel for the first quarter," an ONGC official said, adding that, "the company was already giving a discount of $4 a barrel on its crude to OMCs."

Incidentally, the Petroleum Ministry had recently indicated that it would ask private oil companies and standalone refineries to bear a portion of the burden on subsidised retail fuel prices.

From this year onwards, the revenue loss on petrol and diesel will also be shared.