State-owned ONGC has asked the government to waive the payment of oil cess and royalty as plummeting international oil prices have meant the rate it now gets does not even cover the operating cost, sources said.
The ONGC management has told the government its average price realisation of $22 per barrel in April was 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 (mBtu) is leading to a loss of about Rs 6,000 crore annually.
While the slump in international oil prices is good news for fuel consumers, it is spelling economic havoc on the oil and gas producers.
ONGC, sources said, has asked the government to abolish the oil development cess if the price realised by the producers is less than $45 per barrel.
It also wants royalty that the Centre charges on oil and gas produced from the offshore area to be waived.