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Rise in subsidy burden may weigh heavy on FPO: ONGC

18 May 2011 Evaluate

Oil and Natural Gas Corporation’s (ONGC) planned share offering in July would suffer if the government raised its subsidy burden. The government could raise upstream oil companies’ contribution toward oil marketing firms’ subsidy burden to 38.5% from 33% at present.

The government could decide that upstream oil exploration companies will have to contribute Rs.30,000 crore to help compensate downstream state run fuel retailers for their subsidy burden in the last fiscal, which is around Rs. 78,000 crore. If upstream companies have to shell out more than 33% to compensate OMCs, then ONGC’s profitability will take a definite hit. ONGC's burden comes to about 80% of the total subsidy to be shared by the upstream companies. It has already shelled out Rs. 12,757 crore as compensation to OMCs in the first nine months of last fiscal.

ONGC Share Price

279.25 -4.70 (-1.66%)
08-May-2026 16:59 View Price Chart
Peers
Company Name CMP
ONGC 279.25
Oil India 454.40
Jindal Drilling&Inds 535.85
Deep Industries 457.70
Asian Energy Service 297.85
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