Oil and Natural Gas Corp (ONGC) will rake in about Rs 1,950 crore in additional profit this fiscal from the 46 per cent rise in natural gas prices announced by the government, said the media reports.
After postponing three times, the government yesterday approved a revised formula of pricing almost all domestically produced natural gas from November 1. The current price of USD 4.2 per million British thermal unit will rise to USD 6.17 per mmBtu on a like-to-like basis.
But the current USD 4.2 per mmBtu rate is on net calorific value (NCV) basis, which is roughly 10 per more than heat value on GCV basis. In GCV terms, the current price comes to USD 3.8 per mmBtu.
Using GCV methodology announced by Jaitley, the price has gone up from USD 3.8 to USD 5.61 per mmBtu, over 46 per cent rise. If compared on NCV terms, the price will rise from USD 4.2 to USD 6.17 per mmBtu, a 46 per rise.
ONGC, Chairman and Managing Director, 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 USD 1 rise in gas price increases our revenues by Rs 4,000 crore and net profit by Rs 2,350 crore," he said.
An almost USD 2 increase in gas price will result in ONGC net profit going up by about Rs 4,700 crore on an annualised basis. For the five months of current fiscal, ONGC will stand to benefit about Rs 1,950 crore, he added.