New Delhi: State-owned Oil and Natural Gas Corp (ONGC) lost a whooping Rs 4,745 crore in revenues on selling natural gas at a rate below production cost in 2008-09.
ONGC and state explorer Oil India Ltd (OIL) sell gas at government-controlled rates, called APM (Administered Price Mechanism) price. The APM price for ONGC currently is Rs 3,200 per thousand cubic metres (or Rs 3.2 per unit).
"In 2008-09, our cost of production was Rs 5.87 per cubic metres. Against this our actual price realisation was just Rs 3.191 per unit," a top ONGC official said.
ONGC's total revenue loss on the 17.71 billion cubic metres gas it sold at APM rates last fiscal came to Rs 4,745 crore.
"The APM rates at Rs 3.2 (or USD 1.79 per million British thermal unit) were not even half of the presumed market rate," he said, adding: "We will not breakeven on gas sales, even after the proposed increase in APM price is implemented".
The Oil Ministry has circulated a draft Cabinet note for raising price of gas under APM to Rs 4,142 per thousand cubic metres ($2.32 per mmBtu). APM rates were last revised in June 2005 and the hike proposed is based on Tariff Commission's recommendation that subsequently went into the issue.
"Our breakeven without including any return on capital investment is Rs 4,559 per thousand cubic metres ($2.55 per mmBtu) and after considering a return on capital as suggested by the Traffic Commission, it comes to Rs 5,870 per thousand cubic metres ($3.3 per mmBtu)," he added.
PTI
First Published: Wednesday, December 16, 2009, 15:04