NEW DELHI, June 11 - Oil and Natural Gas Corp (ONGC.BO) may have suffered a 30 billion rupee ($632 million) loss of revenue for selling gas at government-fixed prices in the fiscal year 2008-09, its chairman said on Thursday.
ONGC mainly sells gas to power and fertilser companies at below market rates as the government wants to keep inflation in check and protect poor and middle-class households.
The firm has been seeking an increase in gas prices.
"We understand that rationalisation of gas price agenda is moving forward...the 30 billion rupees loss in the last fiscal is with respect to our cost of production and expected return on investment," R. S Sharma told reporters at an industry function.
The federal government fixed a wellhead price of $4.2 per million British thermal units (mmBtu) for gas from a block in the Krishna Godavari basin off the east coast, awarded to Reliance Industries (RELI.BO) under its licensing policy announced in 1999.
But this is way above what ONGC can get from the sale of gas from the fields awarded to it before the licensing policy was introduced.
He said the government has yet to implement an increase in the gas price that was approved in 2005.
In 2007-08 ONGC produced 22.33 billion cubic metres of gas which also included the output of the firm's joint ventures, which are outside government control.
Sharma said ONGC group plans to borrow 270 billion rupees in the next three to four year to fund various projects of its subsidiaries relating to refineries, power and petrochemical plants.
He said ONGC may borrow 50 billion rupees to redeem commercial paper that his firm had issued to fund the purchase of Imperial Energy Plc.
The commercial paper is due for redemption in January 2010, he added.
ONGC mainly sells gas to power and fertilser companies at below market rates as the government wants to keep inflation in check and protect poor and middle-class households.
The firm has been seeking an increase in gas prices.
"We understand that rationalisation of gas price agenda is moving forward...the 30 billion rupees loss in the last fiscal is with respect to our cost of production and expected return on investment," R. S Sharma told reporters at an industry function.
The federal government fixed a wellhead price of $4.2 per million British thermal units (mmBtu) for gas from a block in the Krishna Godavari basin off the east coast, awarded to Reliance Industries (RELI.BO) under its licensing policy announced in 1999.
But this is way above what ONGC can get from the sale of gas from the fields awarded to it before the licensing policy was introduced.
He said the government has yet to implement an increase in the gas price that was approved in 2005.
In 2007-08 ONGC produced 22.33 billion cubic metres of gas which also included the output of the firm's joint ventures, which are outside government control.
Sharma said ONGC group plans to borrow 270 billion rupees in the next three to four year to fund various projects of its subsidiaries relating to refineries, power and petrochemical plants.
He said ONGC may borrow 50 billion rupees to redeem commercial paper that his firm had issued to fund the purchase of Imperial Energy Plc.
The commercial paper is due for redemption in January 2010, he added.
