Do not see Centre slapping windfall tax, says ONGC's Alka Mittal

A land drilling oil rig, manufactured by MEIL and operated by Oil and Natural Gas Corp., during a media tour in Bhimavaram, Andhra Pradesh. (Bloomberg) — A land drilling oil rig, manufactured by MEIL and operated by Oil and Natural Gas Corp., during a media tour in Bhimavaram, Andhra Pradesh. **(Bloomberg)**

2 min read . Updated: 30 May 2022, 04:13 PM IST Livemint

Addressing a press conference, ONGC chairman and managing director Alka Mittal said, 'We have not received any communication on this'

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Oil and Natural Gas Corporation (ONGC) on Monday said that the Central Government is not looking to impose any new tax on windfall gains that oil and gas producers earned from shooting energy prices.

Addressing a press conference, ONGC chairman and managing director Alka Mittal said, "We have not received any communication on this."

Last week, Oil India Ltd (OIL) Chairman SC Mishra stated the same.

"The government has been conveying to us to go aggressively on (oil and gas) exploration and production spending so as to augment domestic output and cut import reliance," Mittal added.

India's top producer ONGC and Oil India Ltd (OIL) saw bumper profits in the quarter ending March (when international prices soared to a near 14-year high of $139 per barrel) and record earnings in FY22, triggering talks of the Centre slapping a windfall tax.

While the Centre earns 65-66 paise in taxes on every rupee that ONGC earns, the remaining is ploughed back into finding more oil and gas.

The absence of investment in exploration due to low oil prices in the past few years has been one big reason for global oil and gas production not keeping pace with demand globally.

The explorer had, however, not cut exploration and production spending even when oil prices were low, helping find and bring newer finds on to production to offset the natural decline that has set in old and mature fields.

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"I don't think they (government) will be talking about this (windfall tax)," Mittal said.

In recent days, the UK levied a 25% tax on "extraordinary" profits from North Sea oil and gas production to raise $6.3 billion to help fund its support package.

India has cut excise duty on petrol and diesel to ease inflationary pressure. This move cost the government ₹1 lakh crore and talk of a windfall tax is to cover this deficit.

Mittal added that ONGC is spending ₹30,000-32,000 crore annually to maintain output from ageing fields and find new reserves.

Without this spending, the output will fall and India's 85 per cent import reliance will increase.

She further said that ONGC will spend ₹31,000 crore over the next 3 years just on exploration. It is implementing 6 projects at a cost of ₹5,740 crore.

ONGC reported a record net profit of ₹40,305 crore in the fiscal year ended March 31, becoming India's second most profitable company behind Reliance Industries Ltd.

In a statement, ONGC said net profit for the fiscal FY22 (April 2021 to March 2022) soared 258 per cent to ₹40,305.74 crore from ₹11,246.44 crore in the previous financial year.