NEW DELHI - India's Oil & Natural Gas Corp. Monday said its third-quarter net profit fell 17.5%, hurt by state-mandated discounts given to government-run fuel retailers.
India's largest oil explorer by output said that its net profit for the October-December period shrank to 55.62 billion rupees ($1.04 billion) from 67.41 billion rupees a year earlier.
Sales rose 16% to 209.87 billion rupees from 181.24 billion rupees.
ONGC's year-earlier net profit was boosted by a one-time gain of 31.42 billion rupees.
At a press conference, ONGC Chairman Sudhir Vasudeva said net profit would have been higher by 72.70 billion rupees had the company not given discounts to fuel retailers.
He added that the company's net realization -- or the income on each barrel of oil -- rose to $47.97 from $44.71 a year earlier.
However, the cost of production climbed 18% to 141.62 billion rupees.
ONGC, like the country's other state-run explorer Oil India Ltd., is forced to give large discounts to fuel retailers Indian Oil Corp., Hindustan Petroleum Corp. Ltd. and Bharat Petroleum Corp. Ltd..
The retailers are, in turn, made to sell diesel and cooking fuels at government-set discounted prices to help control inflation.
Apart from the discounts, the government also gives cash to the fuel marketing companies to offset part of their losses.
ONGC, which contributes just under two-thirds of India's local crude oil output, has been struggling to raise production. It hasn't been able to bring any new major fields into operation in recent years.
Copyright (c) 2012 Dow Jones & Company, Inc.
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