While the gas price is way below the cost of production, high tax incidence is resulting in cash losses even on crude oil output. Also, ONGC/OIL are required to pay 20 per cent royalty on the price of crude oil it extracts from onland oil blocks to the state governments. OID Cess is levied on crude oil produced as excise duty under the Oil Industries (Development) Act of 1974. The cess is being levied on crude oil from nominated blocks and pre-NELP exploratory blocks only. With the fall in global crude oil prices in mid-2014, companies asked for reducing the levy and converting it into 8-10 per cent ad-valorem.

Source: The Telegraph April 05, 2020 05:15 UTC