ONGC asks government to waive cess

New Delhi: State-owned ONGC has asked the government to waive payment of oil cess and royalty as plummeting international oil prices have meant that the rate it now gets does not even cover the operating cost, sources said.

While the slump in international oil prices to more than two-decade low is good news for fuel consumers, it is spelling economic havoc on oil and gas producers.

Sources said Oil and Natural Gas Corp (ONGC) management has told the government its average price realization of $ 22 per barrel in April is not enough to cover even the operating cost.

On top of it, the drop in natural gas prices to a decade low of $ 2.39 per million British thermal unit is leading to a loss of about Rs 6,000 crore annually. ONGC, sources said, has asked the government to abolish oil development cess if price realized by producers is less than $45 per barrel.