FPO may be impacted if subsidy burden is increased: ONGC

The government has increased upstream oil companies' contribution toward fuel marketing firms' subsidy burden to 38.5% of its total subsidy in this fiscal, reports CNBC-TV18 quoting sources. It is learnt that due to this move, upstream oil companies will have to bear Rs 30,000 crore in FY11.

However, oil companies like ONGC and IOC are awaiting confirmation from the government.

Surprised at the news, AK Hazarika said in an exclusive interview to CNBC-TV18, "The ministry might be thinking to give part of this burden to upstream but, if it is crossing 33.3% then definitely, it will be question for us because our FPO is coming. It may also affect the FPO and ultimately government may loose in that account."

Below is the verbatim transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.

Q: It seems that you will now have to bear 38.5% of the burden, has that been communicated to you by the government?

A: Not yet, probably it is media news. We are still waiting for information from the Ministry for the likely Q4 burden that would to come to us.

Q: It would come as a surprise to you if indeed the upstream were to pay 38.5% instead of the earlier 33%?

A: Yes definitely, it will be a surprise to us. Because the secretary on many occasions had confirmed that the burden of the upstream companies will not go more than one-third that is 33.3%. So, the market will not take this 38.5% comfortably as the additional subsidy burden on ONGC.

Q: Was there any conversation to this regard between you and the oil ministry officials around this petrol price hike?

A: Petrol price hike definitely will be applicable for