The Hindu Business Line : HPCL suffers loss of Rs 15.73 cr in Q3

New Delhi, Jan. 28 High crude and product prices have adversely affected the third quarter profitability of the state-owned refining and marketing company, Hindustan Petroleum Corporation Ltd (HPCL), as it continues to sell petroleum products below the cost price.

HPCL has reported a loss of Rs 15.73 crore in the quarter ended December 31, 2007 compared to net profit of Rs 407.31 crore during the same quarter in the previous fiscal.

The state-owned oil marketing companies have to sell petroleum products – petrol, diesel, kerosene and cooking gas – at a controlled price. The Indian crude basket on Friday stood at $88.46 a barrel. HPCL’s total income during the quarter under review increased to Rs 27,381.47 crore from Rs 22,396.88 crore in the same quarter of the previous fiscal.

For the nine months period of the current fiscal, HPCL has reported a dip in net profit to Rs 750.37 crore (Rs 1,021.63 crore). “Financial results for the nine months have been adversely affected due to high crude and product prices, which could not be fully passed on to the consumers,” the company said.

Under recovery

Part of the revenue loss suffered by the retailers is compensated by the Government, through issuance of oil bonds, while upstream companies like ONGC also share the burden partially. The remaining is shouldered by the refiners.

HPCL said, the under recovery on petrol, diesel, kerosene and cooking gas for the nine months was partially compensated by discounts from upstream companies amounting to Rs 3,320.39 crore (Rs 3,017.82 crore in April-December 2006) on products purchased from them, and the in-principle nod of the Government for issuance of oil bonds amounting to Rs 4,254.55 crore.

The company has factored in these amounts in its accounts during the current nine months period.

Last week, the Government had issued bonds worth Rs 11,256.92 crore to three PSU oil marketing companies to compensate them for under-recoveries on selling petrol, diesel, domestic LPG and kerosene in April-September 2007 period.

For April-September losses, HPCL got Rs 2,355.54 crore worth of bonds carrying coupon rate of 7.95 per cent and maturing in 2025.

Refinery margins

The gross refinery margins (GRM) for the nine months ended December 31, 2007 were $6.17 per barrel for Mumbai refinery, $6.30 per barrel for Visakh refinery.

The gross refining margin is the difference between the price of crude oil and the end products. Shares of the company closed at Rs 264.85 on the BSE on Monday.

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