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HPCL has reported an 86.29 per cent fall in its net profit for the second quarter of the current fiscal year to Rs 318.92 crore (Rs 2327.09 crore).
This is because of a Rs 198- crore loss on selling fuel below market costs (under-recovery) and a rupee-dollar exchange loss of about Rs 150 crore, said K.V. Rao, Director (Finance).
In the last financial year, the first-quarter subsidy was offered in the second, helping HPCL report a higher profit, explained Rao.
HPCL reported a gross refining margin (GRM) of $3.81 a barrel ($4.3/barrel) during the July-September period.
The company suffered a revenue loss of Rs 8,234 crore (Rs 8,341 crore) selling diesel, kerosene and subsidised domestic LPG at controlled prices.
As part of the burden-sharing mechanism of the Government, GAIL and upstream companies ONGC and Oil India paid the PSU Rs 3,909 crore, while Rs 4,127 crore was provided by the Government.
Despite this, the unmet under-recoveries or losses stood at Rs 198 crore. B.K. Namdeo, Director (Refineries), said the PSU may start importing crude oil from Iran this December, if the issue over re-insurance is resolved.
The state-owned refiner stopped importing Iranian oil due to problems getting coverage for refineries using Iranian crude. This was due to sanctions by the EU, which banned European re-insurers from the business.
“The Ministry has given feedback that it (the insurance problem) would be resolved, and this month things will get formalised. For the remaining four months of the current fiscal, we can get around 0.8 million tonnes from Iran,” he said.
In 2013-14, HPCL has not imported any crude from Iran. Last financial year, it bought about 2.3 million tonnes of crude oil from the West Asian country. The PSU has substituted Iranian crude oil with more supplies from Iraq, said Namdeo.
In the current financial year, the refiner and oil marketing company will import nearly 5 mt from Iraq.
It also buys crude oil from Saudi Arabia. HPCL has a crude oil requirement of nearly 11-12 mt a year.
Refinery Operations
HPCL aims to have its refinery in Visakhapatnam fully operational from February. A major fire broke out in August in the refinery’s cooling tower.
Earlier, in May, another fire in the refinery shut down the crude-oil distillation unit. The unit has an annual capacity of 3 million tonnes.
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