ROYALTY RELIEF FOR OIL STATES TO HIT ONGC, OIL
The government has asked state-run oil producers to pay royalty on the full benchmark price instead of the discounted rates they sell to public sector refiners, a move that is expected to bolster income of oil-producing states but affect cash flow of flagship companies such as ONGC and Oil India Ltd with retrospective affect from February 2014. Assam would be the biggest beneficiary of the latest oil ministry order, with a Rs 1,400-crore additional royalty income from ONGC and Oil India. Andhra Pradesh would gain by Rs 72 crore in additional royalty from ONGC. But the order is a double whammy for the producers, who are already reeling under fall in crude prices. The new royalty payment would put additional burden on the company and adversely hit its cash flow. ONGC shares dropped 5% on Monday.