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Oil and Natural Gas Ltd. ONGC

(Manufacturing & Production) Dehradun INDIA
Power News
ONGC directors oppose discount    
Having drawn flak in the wake of the Satyam scam, part-time directors appear to be taking their jobs seriously, particularly in the public sector.

In a marked departure from their malleable dispositions, Oil and Natural Gas Corporation's independent directors have questioned the discount on crude — given to state-run refiners under government orders — saying this is against the interest of shareholders, especially those with small holdings.

ONGC has been giving discount to cover one-third of the losses state-run oilmarketers were suffering for selling fuels at government-capped rates even during oil's high run. The parttime directors on the company's ethics panel have said such huge handouts will not be liked by investors as these shave profits at a time when ONGC's revenues are also dropping due to the fall in global oil prices.

ONGC recently reported a 43% drop in its third-quarter net to Rs 2,475 crore from Rs 4,367 crore in the corresponding previous period, marking the sharpest decline in five years. The money ONGC actually receives on each barrel of oil after discount fell drastically to $34 a barrel in the third quarter from $55 in the year-ago period . While revenue fell, ONGC shelled out Rs 4,900 crore in discounts.

The discounts also become questionable as the sharp fall in crude prices has turned the situation for refiner-marketers , who are now making profits on motor fuels after two sharp cuts in pump prices since December. The losses on cooking gas too have reduced by two-thirds as also in kerosene. These losses are to be made up through Centre's IOUs.

The government's ad-hoc method - - of getting ONGC to share the burden of subsidising cheap fuel -- has remained a sore point with the ONGC brass as it is against the grain of disclosures made at the time of IPO listing . Chairman R S Sharma, and his predecessor Subir Raha, time and again flagged the issue to the parent oil ministry.

They sought a transparent and predictable mechanism such as a tax beyond a certain price-band etc that will tell investors of the liabilities and allow the company to plan its finances.

The situation will worsen for ONGC because costs of oilfield services, which had almost trebled during oil's peak last year, have not come down in tune with crude. The dollar's rise too has added to costs as most of the payments are made in the greenback.?

Oil and Natural Gas Ltd. ONGC 's City : Dehradun
Oil and Natural Gas Ltd. ONGC 's Country : INDIA
 
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