ONGC for hike in gas price

ONGC is seeking a 27 per cent hike in the price of government-regulated natural gas to fund its exploration and production activities. ONGC chairman and managing director R.S. Sharma said that the company wants the administered price mechanism gas price to be raised to $2.5 per mbtu from the present $1.97 per mbtu (excluding royalty). Mr Sharma said that as the Reliance issue has been resolved, ONGC hopes the government will soon take a decision on its claim. The tariff commission had in May this year recommended a base minimum producer price of $2.21 per mbtu. The increase if allowed by the government will add Rs 2,000 crores to the revenues of ONGC.
The price of gas in India is capped below international prices to provide cheap fertiliser and power to the common man. Mr Sharma said the company was also seeking market price for incremental gas production from fields given to ONGC on nomination basis. "The policy for areas awarded since 2000 under the New Exploration Licensing Policy (NELP) is clear. Oil and gas from NELP blocks are guaranteed market price. But even in nomination fields we are making fresh investments (at current prices) to raise production or arrest the decline that sets in with age. For incremental production, we should be given market price," he said.
Mr Sharma said that ONGC may consider a bonus issue and a share split in the future. "There is no decision to immediately do a share split or a bonus issue. But we are sensitive to the concerns of the small investors that they may be able to buy ONGC share at current prices (so) in due course we will resort (to share split and/or bonus issue); but when it will happen I cannot say," he said.