ONGC puts off retail plans
The PSU's move stems from its ineligibilty for compensation (oil bonds) for selling fuel below cost price.Updated: Aug 08, 2006 20:45 IST
Oil and Natural Gas Corp (ONGC), India's largest oil and gas producer, has deferred its plans to set up petrol pumps, Petroleum Minister Murli Deora said on Tuesday.
In a written reply to a question in Rajya Sabha, he said that compensation in the form of oil bonds for selling fuel below the cost of production was only available to public sector oil retailers - IOC, HPCL, BPCL and IBP and "no such compensation mechanism is available to new players in this business, including ONGC."
"In view of this, ONGC has decided to defer its plan for the development of retail outlets," he said.
ONGC had been granted license to sell petrol and diesel in accordance with the guidelines issued by the government. ONGC envisaged setting up 1,100 petrol pumps in the country to take benefit of complete value chain integration in line with such models followed by global oil majors.
"ONGC has incurred an expenditure of Rs 8.67 crore so far in this regard," he said.
Deora said in the wake of rising oil prices and to contain the burden on the consumers, the Government had taken a conscious decision not to increase the prices of petrol and diesel at par with the international prices of these productions resulting in under-recoveries.
To another question, he said ONGC plans to produce 27.35 million tonnes of crude oil during the current fiscal while Oil India Ltd (OIL) is targeting a 3.5 million tonnes output. MORE
ONGC had in 2005-06 produced 24.406 million tonnes of crude oil while OIL had achieved 3.23 million tonnes target.
To a separate query, Minister of State for Petroleum and Natural Gas Dinsha Patel said a proposal to enhance the empowerment of the board of ONGC Videsh Ltd, the overseas arm of ONGC, for taking investment decisions upto Rs 1,000 crore is under consideration of the Government.
The Board of Directors of OVL is now empowered to take decision on investments of Rs 300 crore of 75 million dollars whichever is less, beyond which investment proposals are required to be recommended by the Empowered Committee of Secretaries for obtaining the approval of the Government.
The V Krishanmurthy Committee on "Synergy in Energy" had recommended raising single investment limit from Rs 300 crore to Rs 2,000 crore, he added.
First Published: Aug 08, 2006 20:45 IST