Gas price hike to boost ONGC net

New Delhi, Oct. 19: Stateowned Oil and Natural Gas Corp ( ONGC) will rake in about ` 1,950 crore in additional profit this fiscal from the 46 per cent rise in natural gas prices announced by the government.

After postponing three times, the government on Saturday approved a revised formula of pricing almost all domestically produced natural gas from November 1. The current price of $ 4.2 per million British thermal unit will rise to $ 6.17 per mmBtu on a like- to- like basis.

Finance minister Arun Jaitley on Saturday said the price from November 1 will be $ 5.61 per mmBtu on heat value the fuel will generate on gross calorific value basis. But the current $ 4.2 per mmBtu rate is on net calorific value basis, which is roughly 10 per more than heat value on GCV basis. In GCV terms, the current price comes to $ 3.8 per mmBtu.

Using GCV methodology announced by Mr Jaitley, the price has gone up from $ 3.8 to $ 5.61 per mmBtu, over 46 per cent rise. If compared on NCV terms, the price will rise from $ 4.2 to $ 6.17 per mmBtu, a 46 per rise. ONGC CMD Dinesh K. Sarraf said the decision is a positive for the company as it will help monetise some of its small and marginal gas discoveries. “Every $ 1 rise in gas price increases our revenues by ` 4,000 crore and net profit by ` 2,350 crore,” he said. An almost $ 2 increase in gas price will result in ONGC net profit going up by about ` 4,700 crore on an annualised basis. For the five months of current fiscal, ONGC will stand to benefit about ` 1,950 crore, he said.