India’s top oil and gas producer Oil and Natural Gas Corporation (ONGC) wants the government to scrap the windfall profit tax levied on domestically produced crude oil and instead use the dividend route to tap into bumper earnings resulting from a surge in global energy prices.

The PSU also favours a floor price for natural gas at $10 per million British thermal unit — the current government-dictated rate — to help bring deposits in challenging areas to production, two sources aware of the matter said.

The ONGC management during discussions with government officials stated that levying windfall profit tax on domestic oil producers, while at the same time reaping rich savings from buying discounted oil from Russia was unfair.

Buying discounted Russian crude oil, which was shunned by the West since the Ukraine conflict, has helped save Rs 35,000 crore and this savings should be ploughed back by boosting domestic output, they said.

The management told the government the savings from Russian oil buy should be allowed to be passed on to the company which will invest the same in identified projects.

It feels companies should be allowed to reap higher revenues and profits from elevated oil and gas prices instead of the government levying windfall profit tax.

This higher profit can be then tapped for dividends which are a more equitable way of distributing wealth, the management told the government representatives.