making up for over 37% of the under-recovery compensation to the OMCs.
ONGC's cash reserves dipped by around Rs 2,500 crore last year as its contribution to OMCs for selling subsidised fuel stood at Rs 49,421 crore or 31% of the overall Rs 1.61 lakh crore under recovery figure. In the first quarter of this financial year, its share of burden rose to Rs 12,300 crore or close to 50% of overall under recoveries. Over the last 10 years, ONGC has contributed about Rs 2,16,336 crore as under-recovery and its accumulated impact to the net profits during the period was around Rs 1,25,477 crore.
ONGC recently recommended a new oil subsidy sharing formula to the oil ministry to ensure that its exploration plans are not impacted. The company's oil production has not met targets over the last five years. “We suggested to the oil ministry that ONGC must contribute to subsidies only when oil prices are above $65/barrel. If the price of oil remains between $65-$100, the discount should be 85% of the price beyond $65/bbl. Further, if the oil price increases beyond $100/bbl the discount should be 90% of the price beyond $100/bbl,” said the ONGC official.
ONGC reported a 34% decline in its net profit at Rs 4,016 crore in the first quarter of current year after paying Rs 12,622 crore compensation to state refiners for selling fuels below market rates.