Oil and Natural Gas Corporation (ONGC) may be forced to supply crude to domestic oil companies at the existing $16 a barrel, as it has not received permission from the ministry to charge the new price. ONGC wants to increase the price of crude to $21 a barrel.After the dismantling of the administered price mechanism (APM) from April 1, 2002, the government has in-principle agreed to allow ONGC to charge market determined price for crude. The three big domestic consumers — BPCL, HPCL and IOC — have also not received any communication from ONGC regarding the change in the crude price.The companies have crude reserves till the end of this month, for which they have been paying ONGC $16 per barrel. “ONGC will have to inform us by the end of this month, if they want to increase the price of crude,” said a company offical.Another official added that the companies would take a huge hit if ONGC increased crude price, as the refining companies have been directed by the ministry not to increase the price of petroleum products. The unusual increase in international crude prices have already hit the thin margins of the refining companies. A company official added that refining companies already suffering losses would be severely hit if ONGC also increases crude prices by the proposed $5 per barrel. For every one dollar increase in the crude prices, the price of petrol would go up by 60 paise while diesel would be up by 45 paise.An ONGC official said that the company would pursue with the petroleum ministry to allow them to increase the crude price as the company has chalked out a large number of exploraton programmes. He added: “The company has to take care of its interests.” He also said that ONGC needs to increase crude price so that it can break even, as the government has doubled the cess on crude from Rs 900 per tonne to Rs 1,800 per tonne.
