NEW DELHI: With a strong push from the oil ministry, ONGC is in the process of revising the fuel subsidy sharing formula by reducing the outlay by a quarter by restructuring the share-based statutory petroleum tax.

Under the new subsidy sharing formula, the cost of oil development paid to ONGC and other upstream oil producers to the government will be reduced to Rs 4,500 per tonne, sources close to the matter said.

The measure to reduce the subsidy burden will change the government’s plan to sell oil at a price of Rs. 5 per tonne to the Oil and Natural Gas Corporation. (ONGC) 10% shares are worth around Rs. 170 billion.

Total tax for the current fiscal year is Rs 105 billion, of which fuel subsidy paid by upstream companies ONGC and Oil India (OIL) in the first half of the year is Rs 319.26 billion, and the rest is used for the first half of the expenditure. The financial year is Rs 800 billion and cannot be exceeded.

Oil and Natural Gas Corporation (ONGC) Until recently, upstream manufacturers received nearly half of the subsidy, but fuel retailers have suffered revenue losses or a lack of recovery due to the sale of cooking fuel and diesel at government-controlled prices.

This relief came in the form of ONGC selling oil to refineries at a steep discount as net cash was below the economic cost of oil, putting pressure on its balance sheet.

According to sources, the subsidy burden on upstream oil companies has increased from Rs 320 billion (30% of gross unrecoveries) in 2008-09 to Rs 670.21 billion (48% of gross unrecoveries) in 2013-14.

ONGC paid subsidies worth Rs 56, 384 crore in 2013-14, which is expected to come down to around Rs 32,000 crore in the current fiscal.

This has severely limited the ability of these companies to intensify exploration in difficult areas and has had a negative impact on domestic oil production.

In a report by the Comptroller and Auditor General of India (CAG) on the pricing mechanism earlier this year, the combined effect of tariffs and discounts meant that ONGC’s profit per barrel of crude from its designated blocks was much lower than that of the private sector. p The report also noted that uncertainty over the recovery financing mechanism would put public sector upstream companies at a relative disadvantage.

Sources said the subsidy that the government wants to levy from sector-specific public sector upstream oil companies is seen as part of the subsidy burden on ONGC and Oil India Limited (OIL).

As a result, the upstream share will reduce the amount paid to the government.

With international oil prices plummeting, the overall recovery gap is estimated to be around Rs 79 billion for the current fiscal.

Of this, about Rs 510 billion was spent in the first half of the year, of which ONGC paid Rs 268.41 billion in subsidies, Rs 40.85 billion in oil subsidies and Rs 10 billion in GAIL subsidies.

According to sources, the Ministry of Petroleum Resources is of the view that the country may lose more than 70 million tons of crude oil production in the next decade if there is not enough money to improve oil yields from aging fields and strengthen the oil revenue scheme.

This is expected to add Rs 330,000 crore to imports. However, if this crude is produced locally, the cost is only 11,200 Thus saving Rs 221,000 crore crore crore.

Further, new exploration in marginal/deep sea/remote areas requires huge investment and capital. Upstream primary production units can survive only if they are able to generate sufficient revenue (including all costs and a reasonable profit).

It is expected to produce about 13,000 60.4 million tons of crude oil worth Rs. 60.4 million tons billion.

The sources said that the Ministry of Defense believes that gas should be utilized to develop the oil industry. However, in 1974-755, years to 2012-13 118, 506.95 million rupees were raised out of the million rupees, only 902, 400 million rupees were utilized for this purpose. In order to achieve the desired objective, it is necessary to levy taxes on ONGC and petroleum sector specified in the bill as part of the overall burden sharing mechanism for the year 2014-15.