ONGC, the state-owned oil and gas company, on Saturday reported halving of its net profit in the December quarter after being forced to pay fuel subsidises despite plummeting oil prices.
Net profit at Rs 3,571.20 crore, or Rs 4.17 per share, in October-December quarter was half of Rs 7,125.97 crore net profit, or Rs 8.33 a share, in the same period of the previous fiscal, the company said in a statement in New Delhi.
ONGC shelled out Rs 9,458 crore in fuel subsidy during the quarter when its average crude oil price realisation fell to $76 per barrel from $108.19 in October-December 2013.
The subsidy payment was in form of discount on crude oil it sold to refiners and its net realisation after the payout was $35.57 per barrel.
The subsidy discount was $40.43 per barrel.
In third quarter of the previous fiscal, the company's net realisation was $45.99 per barrel after payout of $62.20 discount.
Fuel retailers like IOC, BPCL and HPCL sell domestic LPG and kerosene through PDS at government-controlled rates which are way below the cost. The loss they thus incur are made good by way of subsidy from the Budget and assistance from upstream firms like ONGC.
The government subsidy support meets one-third of the loss while upstream firm picks up the remaining tab.
But for the subsidy payout, ONGC's profit would have been Rs 5,386 crore more. In the first nine months, ONGC has had to shell out Rs 36,300 crore which lowered the net profit by Rs 20,427 crore.
ONGC reported a net profit of Rs 13,7978 crore in April-December.
Reversing the declining trend of several quarters, ONGC saw its crude oil production rise by 3.35 per cent to 5.3 million tonnes in October-December but gas output slipped by 4.5 per cent to 5.61 billion cubic meters.
ONGC said eight new oil and gas discoveries have been made in the past quarter taking the total to 18 during the ongoing fiscal.