Rise in subsidy burden may hit ONGC FPO
Oil and Natural Gas Corp said its planned share offering in July would suffer if the government raised its subsidy burden.
By ET Bureau | Updated:
MUMBAI: Oil and Natural Gas Corp said its planned share offering in July would suffer if the government raised its subsidy burden.
The ONGC shares fell nearly 7% on Tuesday after reports said the government could raise upstream oil companies' contribution toward oil marketing firms' subsidy burden to 38.5% from 33% at present. Upstream companies - Oil India and Gas authority of India - also ended down.
Acting chairman AK Hazarika said, "I don't have any official confirmation on this development as of now but this news could continue to negatively impact our upcoming follow-on public offer that we are planning to launch in July."
"We need full clarity on subsidy-sharing as we have to close our accounts and thus we are in constant dialogue with the petroleum ministry," Hazarika said.
According to reports, the government could decide that upstream oil exploration companies will have to contribute 30,000 crore to help compensate downstream state-run fuel retailers for their subsidy burden in the last fiscal which is around 78,000 crore.
"If upstream companies have to shell out more than 33% to compensate OMC's then our profitability will take a definite hit and this continuous confusion on the subsidy-sharing formula is not good for markets and investors," Hazarika said.
The ONGC shares fell nearly 7% on Tuesday after reports said the government could raise upstream oil companies' contribution toward oil marketing firms' subsidy burden to 38.5% from 33% at present. Upstream companies - Oil India and Gas authority of India - also ended down.
Acting chairman AK Hazarika said, "I don't have any official confirmation on this development as of now but this news could continue to negatively impact our upcoming follow-on public offer that we are planning to launch in July."
"We need full clarity on subsidy-sharing as we have to close our accounts and thus we are in constant dialogue with the petroleum ministry," Hazarika said.
According to reports, the government could decide that upstream oil exploration companies will have to contribute 30,000 crore to help compensate downstream state-run fuel retailers for their subsidy burden in the last fiscal which is around 78,000 crore.
"If upstream companies have to shell out more than 33% to compensate OMC's then our profitability will take a definite hit and this continuous confusion on the subsidy-sharing formula is not good for markets and investors," Hazarika said.
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