State-owned Oil and Natural Gas Corporation (ONGC) has requested the petroleum ministry for royalty payment on onshore crude at a post discount price.
The oil major sells crude at a discount to state-owned refiners as a part of a burden-sharing arrangement put forward by the petroleum ministry to ensure that consumers are shielded from the sudden surge in global crude oil prices. In earlier interactions, petroleum secretary MS Srinivasan had assured ONGC that a solution acceptable to all stakeholders would be found soon.
The request was made by ONGC officiating chairman and managing director RS Sharma in a letter to Prabh Das, joint secretary in the petroleum ministry. The ministry had earlier indicated that it might consider total subsidy discount on offshore crude to meet the concerns of both ONGC and state governments.
"The matter assumes immediate urgency on account of a steep increase in the subsidy discount advised by MoPNG (ministry of petroleum and natural gas) for the first half of the financial year 2007. During 2006-07, ONGC has paid average royalty as high as 42 per cent against the statutory limit of 20 per cent," Sharma points out in his letter.
He has further urged the petroleum ministry to expedite the decision to allow ONGC to get royalty payment on onshore crude at a post discount price, so that necessary adjustment in future royalty payments can be made by ONGC based on the decision of the government on subsidy discount for third quarter of financial year 2007.