Oil minister Veerappa Moily Tuesday reiterated the government's commitment to raise gas prices and said the revised gas price would be notified shortly.
"What came as music to our ears yesterday was that very categorically it was told that we will be given the producer price and as regards the subsidy to be given to fertilizer and power sectors, that would be decided between the finance ministry and the concerned ministry," Vasudeva said.
Vasudeva is hoping that the government will allow ONGC to retain much of the profits from the higher gas prices, as the company was bleeding cash from selling oil at subsidized prices.
Vasudeva is doubtful if the under-recovery on diesel can be eliminated in six months, because the 50 paise per litre monthly increase in diesel price is not enough to bridge the Rs 9 per litre under-recovery.
He has warned that unless the government acted decisively on resolving the oil subsidy issue, ONGC's cash reserves would be drained in the next couple of years to fund its capex programme. The company's 12th plan outlay is Rs 1,65,000 crore, which works out to around Rs 35,000 crore annually.
"There is no threat but if we don't address this subsidy burden this will start affecting us because our outlay for this year is about Rs 35000 crore and since we don't get any extra budgetary support, all this we have to generate through our revenues," he said.
He said at current level of net realization, the company would not be able to generate Rs 35,000 crore
"So we will have to draw down about Rs 5000 crore this year and our projection is that in case the prices do not change and we continue getting same prices of about USD 43-44 we might need another Rs 5000 crore next year as well," he said.
"That means in next two years we would finish our cash, then we will have to go to the market to either raise that and if we don't do that then we will have to curtail our activities," he said.
Next Page: Full interview transcript
ONGC stock price
On November 27, 2013, at 14:15 hrs Oil and Natural Gas Corporation was quoting at Rs 291.30, up Rs 4.50, or 1.57 percent. The 52-week high of the share was Rs 354.10 and the 52-week low was Rs 234.40.
The company's trailing 12-month (TTM) EPS was at Rs 22.24 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 13.1. The latest book value of the company is Rs 145.47 per share. At current value, the price-to-book value of the company is 2.00.
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