Net profit in January-March dropped 26 per cent to Rs 2,791 crore, from Rs 3,776 crore in the same period a year ago, ONGC Chairman and Managing Director A K Hazarika told reporters here.

ONGC had to pay the highest ever Rs 24,892 crore, half of it in Q4, in fuel subsidy by way of discounts on crude oil it sells to state-owned refiners.

Till last year, ONGC and other upstream firms Oil India and GAIL met one-third of the loss retailers incurred on selling diesel, domestic LPG and kerosene at government controlled rates but in 2010-11 fiscal the sharing has gone up to 38.8 per cent.

“We paid Rs 12,136 crore in fuel subsidy compensation in Q4 compared to Rs 4,999 crore in the same period the previous fiscal,” he said.

Had the fuel subsidy not increased, net profit would have been higher by Rs 2,074 crore.

Hazarika said ONGC got USD 108.9 on sale of every barrel of crude oil in January-March quarter but it had to give a discount of $70.15 per barrel, taking the net realisation to USD 38.75 per barrel.

For the 2010, net profit was up 13 per cent to Rs 18,924 crore from Rs 16,768 crore in 2009-10.

But for the subsidies, ONGC’s net profit should have been higher by Rs 14,247 crore in the full fiscal.

In the full fiscal, ONGC’s net realisation was $53.77 per barrel after giving a discount of $35.64 per barrel.

Hazarika said the company’s crude oil production was marginally down at 24.42 million tons in 2010-11 from 24.67 million tons in the previous year. Gas output was almost flat at 23.09 billion cubic meters.

Sales were up 5 per cent in Q4 to Rs 15,554 crore and by 10 per cent in full fiscal 2010-11 to Rs 66,152 crore.