New Delhi, August 16
Prices of pure fuel in India are more likely to be minimize to USD 1.9-1.94—the lowest in additional than a decade—from October, denting revenues of producers comparable to Oil and Natural Gas Corp (ONGC) who’re already incurring large losses on fuel manufacturing.
A fuel worth revision is due from October 1 and going by the modifications within the benchmark fee in fuel exporting nations, the worth is more likely to be anyplace between USD 1.90 to USD 1.94 per million British thermal unit (mmBtu), sources aware about the event mentioned.
This would be the third straight discount in charges in a single yr. Prices have been minimize by a steep 26 per cent to USD 2.39 per mmBtu in April.
Prices of pure fuel, which is used to supply fertiliser and generate electrical energy and can also be transformed into CNG to be used in vehicles as gas and cooking fuel for households, are set each six months—on April 1 and October 1 every year.
Sources mentioned the minimize in costs would imply a widening of losses for India’s prime oil and fuel producer ONGC.
ONGC had posted Rs 4,272 crore loss on fuel enterprise in 2017-18, which is more likely to widen to over Rs 6,000 crore within the present fiscal (April 2020 to March 2021), they mentioned.
ONGC has seen incurring losses on the 65 million normal cubic meters per day of fuel it produces from home fields shortly after the federal government in November 2014 launched a brand new fuel pricing system that had “inherent limitations” because it was primarily based on pricing hubs of fuel surplus international locations such because the US, Canada, and Russia.
The present USD 2.39 per mmBtu fee is the bottom in additional than a decade.
Sources mentioned ONGC in a latest communique to the federal government has acknowledged that the break-even worth to supply fuel from new discoveries was within the vary of USD 5-9 per mmBtu.
In earlier years, loss from the fuel section was getting offset from the acquire from the oil enterprise. But with oil enterprise itself coming below extreme pressure resulting from a pointy droop in benchmark costs, it has develop into tough for the corporate to satisfy even the working bills, they mentioned.
In May 2010, the federal government had raised the speed of fuel offered to energy and fertilizer companies from USD 1.79 per mmBtu to USD 4.20.
ONGC and Oil India Ltd (OIL) received USD 3.818 per mmBtu worth for the fuel they produced from fields given to them on nomination foundation and after including 10 per cent royalty, the gas price USD 4.20 per mmBtu for customers.
The Congress-led UPA had authorised a brand new pricing system for implementation in 2014 that may have raised the charges however the BJP-led authorities scrapped it and introduced a brand new system.
The new system takes under consideration the volume-weighted annual common of the costs prevailing in Henry Hub (US), National Balancing Point (the UK), Alberta (Canada), and Russia with a lag of one-quarter. Prices are set each six months—on April 1 and October 1 every year.
The charges on the first revision, utilizing the brand new system, got here to USD 5.05 however within the subsequent six-monthly critiques saved falling until they touched USD 2.48 for April 2017 to September 2017 interval. Subsequently, they rose to USD 3.69 in April 2019 to September 2019 earlier than being minimize by 12.5 per cent in October 2019 to USD 3.23. PTI