Coronavirus impact: ONGC to lose Rs 4,000 crore with the new gas price

For every $1 dollar change, the company’s revenues are impacted by Rs 4,400-4,500 crore annually.

State-owned Oil and Natural Gas Corp (ONGC) will lose about Rs 4,000 crore in revenue and start making cash losses after the government slashed the natural gas prices by a steep 26 per cent by benchmarking it against rates prevalent in gas-surplus nations.

Prices of natural gas, which is used to produce fertilizer, generate electricity and gets converted into CNG for use in automobiles and piped natural gas for household cooking, was from April 1 cut to $ 2.39 per million British thermal unit – a rate about 37 per cent lower than the cost of production. “These rates are unsustainable for us. We have already told the government that the gas pricing should be freed. There should be complete pricing and marketing freedom,” ONGC Chairman and Managing Director Shashi Shanker told PTI here.

The BJP-led government had in October 2014 evolved a new pricing formula using rates prevalent in gas surplus nations like the US, Canada, and Russia to determine the price in a net importing country. Prices using this formula are calculated semi-annually. Oil Minister Dharmendra Pradhan, in a written reply to a question in the Lok Sabha on March 20, 2017, had stated that the cost of production of natural gas in the prolific Krishna Godavari basin is between $ 4.99 -7.30 per mmBtu. The same for other basins is in the range of $ 3.80 -6.59 per mmBtu, he had said…Read More

Modi promises to light up all homes by December 2018 with Rs 16000-cr scheme

Saubhagya scheme aims at providing 'last mile electricity connectivity to all rural and urban households'

Setting the bar for higher government spending in the infrastructure sector, Prime Minister Narendra Modi on Monday unveiled a flagship programme called “Saubhagya — Pradhan Mantri Sahaj Bijli Har Ghar Yojana” to provide power to all households in the country by December 2018. The Rs 16,320-crore scheme aims at providing “last-mile electricity connectivity to all rural and urban households”.

The announcement, made at the headquarters of Oil and Natural Gas Corporation, would reinforce the ruling party’s electricity-for-all target, recently advanced from 2019 to 2018. “Of the 250 million houses that India has, more than 40 million of the houses are electrified. Through Saubhagya, without taking money from the poor, electricity will be provided to these (remaining) families. For this, we expect an expenditure of more than Rs 16,000 crore,” Modi said.

The Union government will provide 60 per cent of the funds, amounting to Rs 12,320 crore. For special category states, the Centre’s contribution will be 85 per cent.

State governments and their utilities will provide 10 per cent funds (in the case of special category states, the share will be 5 per cent). Loans will account for the remaining component....READ MORE