ONGC posts Rs 248-crore loss in Q4 on tax provisions; profit down 3.7%

ONGC, India’s largest oil and gas producer, posted a surprise loss in the March quarter after making more than Rs 12,100 crore earmarked for disputed tax liabilities.

Oil and Natural Gas Corporation (ONGC) reported a net loss of Rs.247.70 crore in the January-March quarter as compared to a net profit of Rs.8,859.54 crore in the previous year, according to a company statement.

The service tax department in the various work centers filed a request to pay the service tax on the royalties paid by the company to the state and the central government on the crude oil and natural gas it produces from underground. The company has challenged the claims in the courts.

While the matter is still pending in the courts, “As a bountiful warning, the company has deposited the disputed service tax and GST on the royalty plus interest under protest of Rs.11,558 crore till 31st March 2023,” notes on the accounts said, adding Rs.1,862 crore towards The fine and other differences in tax claims are also disclosed as a contingent liability.

ONGC said it will continue to challenge the tax before various forums based on legal opinion, as service tax/GST does not apply to royalty in relation to crude oil and natural gas.

“The company has reviewed the entirety of the disputed service tax and GST case on royalty and has decided to make provision for these disputed taxes as a prudent and conservative practice. Accordingly, during the quarter and year ended 31st March 2023, the company has filed Rs 12,107 crore for the disputed taxes of ST/ GST on the royalty for the period from 1st April 2016 to 31st March 2023 with interest on it,” it said in the statement.

It said this “negatively impacted profitability” for the fourth quarter of fiscal year 2022-23 and the full fiscal year FY23.

Revenue increased by 5.2 per cent to Rs. 36,293 crore in the January-March period.

For the full financial year 2022-23 (April 2022 to March 2023), ONGC recorded a net profit of Rs. 38,829 crore, down 3.7% from a net profit of Rs. 40,306 crore in the previous financial year.

The company earned $77.12 per barrel of crude oil it produced in the January-March quarter and $91.90 per barrel in FY23. This compares to achieving $94.98 per barrel in January-March 2022 and $76.62 per barrel in FY2021. to 2222.

The price of gas increased to $8.57 per mmbtu in Q4 and $7.34 in FY23. This compares to $2.90 per mmbtu in the fourth quarter of the previous fiscal year and $2.35 in FY22. .

The company paid a total dividend of 225 per cent (Rs 11.25 per share of par value of Rs 5 each) with a total payout of Rs 14,153 crore.

ONGC said it produced 1 percent less than 21.5 million tons of crude oil in FY23, while gas production fell 1.5 percent to 21.3 billion cubic meters.

“The decline in oil and gas production is primarily due to delays in the implementation of the KG-98/2 project, the Cluster II project, lower than expected production from WO-16 and Cluster-7 and reservoir issues in the S1-VA fields,” the statement said.

The company’s overseas unit also produced less crude oil at 6.35 million tons in FY23 compared to 8.1 million tons in the previous year. However, the net profit rose to Rs.1,700 crore due to higher crude oil prices as compared to the net profit of Rs.1,589 crore in FY22.

ONGC said it made a total of 8 finds (5 onshore and 3 offshore) during the 2022-23 fiscal year in its operating spaces. “Of these, 3 (2 on land and 1 offshore) are prospects and 5 (3 on land and 2 offshore) are complexes (of old fields),” the statement said.