Happy with Kirit Parikh Committee report: ONGC

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Happy with Kirit Parikh Committee report: ONGC

In an interview with CNBC-TV18, RS Sharma, Chairman of Oil and Natural Gas Corporation (ONGC), spoke about his views on Dr Kirit Parikh’s Committee report.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Kirit Parikh report: Udayan says implementation key Kirit Parikh panel report to be submitted today: Oil Secy ALSO READ See latest News about ONGC See previous management interviews See what other Experts & Brokerages are saying about ONGC ONGC BSE | NSE 31/05/12 Are Mutual Funds betting on ONGC? Other Stocks in this news GAIL India |

Contented with the Parikh Committee report, RS Sharma, Chairman of Oil and Natural Gas Corporation (ONGC) said the recommendations remove subsidy uncertainties, if implemented. Minority shareholders need to have clarity on subsidies being paid by their company.

He further said that the companies needed higher realisations to invest back in exploration as the cost of offshore services was too high.

Here is a verbatim transcript of an exclusive interview with RS Sharma on CNBC-TV18. Also watch the accompanying video.

Q: We asked Dr Kirit Parikh about what happens to ONGC if this report is implemented. Have you done any back of the envelope calculations of how ONGCs realizations will go now with the rising price of crude given the formula that Dr Parikh has worked out for you?

A: We shall be doing our working but I am happy about our recommendations being accepted and even about what they have come out with the mechanism, calibrated formula at different price levels of the crude oil, how this prices of sensitive products move and this committee. The auto fuels will be deregulated. The price has to move up and down at various price levels that is what we have been lobbying for.

The best thing about recommendation is that it brings a transparency. It brings certainty for all stake holders that at different price levels how the product prices will be moved, what is going to be likely under recoveries and how they are going to be shared. Substantively, we very much welcome this report and that is what ONGC has been asking for quite some time.

Q: So even if you worked with the current level of under recoveries say about Rs 40,000 crore give or take some what is your estimate of how this would change the subsidy sharing burden for ONGC?

A: I need at least a day to get it worked out. Broadly, it will be less than what we are currently bearing the burden. The good think about it is that we have agreed when the prices move up further. We are willing to take higher burden and when it comes through a mechanism, our investors in the company and shareholders also know what is going to be the retention price for the company and what is the upfront and the hit. I feel that is the most welcome part of this committee's recommendations.