ONGC wants government to offset additional cess on crude
Sugar production in India, the world's second-largest producer but the largest consumer, is estimated to touch 25.2 million tonnes against the annual demand of 22 million tonnes.
PSU oil major, Oil and Natural Gas Corp (ONGC), on Thursday said that it has appealed the government to offset the additional cess on crude.
"Our appeal is to at least offset the additional cess burden, which has increased by 80 per cent from Rs 2,500 to Rs 4,500 a tonne now," ONGC CMD Sudhir Vasudeva said.
"This itself is going to impact us by around Rs 4,500 crore...if we add up excise and service tax, it amounts to another Rs 5,000 crore," Vasudeva said.
"This additional cess on crude translates into burden of $6 per barrel, taking our production cost up from $38 per barrel to $44."
Crude petroleum produced in India attracts a cess of Rs 2,500 per tonne under the Oil Industries Development Act. As a measure of indexation, the Finance Ministry has proposed to increase the rate of cess to Rs 4,500 per tonne in the Union Budget 2012-13, which impacts companies such as ONGC, and Oil India Ltd.
This rate was last revised in Budget 2006-07. "On one hand, the subsidy burden is there, on other hand this cess burden has come up," Vasudeva said.
The subsidy burden on ONGC in first nine months of FY 2011-12 stood at Rs 32,690 crore, compared to over Rs 24,890 crore in FY 2010-11.
"Today we are a debt-free company, and to fuel growth it is necessary that such additional levies should be offset," Vasudeva said.
Expressing hope for an early resolution, Vasudeva said the Ministry of Oil and Petroleum has taken up the issue with the Union Finance Ministry.