Hindustan Petroleum Corp?s (HPCL) quarterly profit plunged to R147 crore, from R2,725.18 crore in the same quarter last year, as the state oil refiner faced rising costs and received lower government compensation for selling products at a discount.
Total costs increased 18% to R52,858 crore for the quarter ended December, offseting a 11% rise in total operating income to R53,424 crore.
High crude oil prices, ageing facilities and weakness in the Indian rupee have been squeezing gross refining margins (GRMs) at state oil refiners.
State-run refiners, such as HPCL, Bharat Petroleum (BPCL) and Indian Oil Corp (IOC), have a lower capacity to process cheaper heavy crude than private players Reliance Industries and Essar Oil, which recently reported healthy Q3 margins. Over the first nine months of the year, HPCL averaged a GRM of $1.46, translating to a GRM of $3.19 in the quarter. In contrast, RIL reported a GRM of $9.60, while Essar Oil?s GRM came in at $9.75.
HPCL is looking to expand its Mumbai and Vishakapatnam refineries, and increase their complexity, in order to help improve margins. It also has plans to set up a new refinery project in Ratnagiri, Maharashtra.
HPCL received compensation of R5,538 crore from the government to help cover under-recoveries, while discounts on crude oil purchased from upstream oil companies, such as ONGC and GAIL, amounted to R2,715 crore in the quarter.
This was lower than last year when HPCL received In addition, ONGC, Oil India and GAIL (India) ? sell crude oil and associated products at a discount to help the fuel retailers cover losses of revenue R6,582 crore in compensation from the government and R3,351 crore in discounts from upstream players.
In addition to the ministry?s cash subsidies to state oil retailers, state-run upstream companies sell products at a discount to help the fuel retailers.
