Bharat Petroleum expects stabilised earnings from the revamped Kochi refinery to reflect in income statements from next January, the company’s management told analysts during a conference call on Monday.
BPCL’s Kochi refinery is currently undergoing capacity expansion from 9.5 million tonnes a year to 15.5 mt at a cost of about ₹16,000 crore.
The expansion work is on track for scheduled commissioning in May this year, with about 90 per cent of the work done, said R Rajamani, GM, Corporate Treasury.
BPCL reported net profit of ₹1,488.6 crore backed by gross refining margin (the difference between the cost of crude oil and the price of refined products) of $7.67 a barrel in the December 2015 quarter.
Crude throughput for the quarter was at 5.87 million tonnes.
GRMs for the company’s subsidiaries were even more impressive
. The Bina refinery in Madhya Pradesh reported net profit of ₹100 crore for the quarter, while Numaligarh in Assam reported profit after tax of ₹418 crore.
The GRMs at these refineries were $12.4 and $11 a barrel, respectively, neck-and-neck with mega private sector refineries like those of Reliance Industries, which reported a GRM of $11.5 for the same quarter.
BPCL has already invested ₹10,000 crore of the budgeted ₹16,000 for the Koch refinery expansion, of which roughly 70 per cent is debt.
The oil marketing company expects to begin capitalising the Kochi’s capex costs by Q2FY-17.
An analyst who attended the earnings call expects the annual capitalisation cost (interest and depreciation) for BPCL to be roughly at ₹1,200-1,300 crore.
As for the six-mt Bina refinery, a joint venture with Oman Oil company, its capacity will be expanded in two phases; to 7.8 mt by 2018 and 15 mt by 2020-21.
Preliminary work and capital expenditure on the 30 per cent creeping expansion is expected to start with the FY-17 and is scheduled to be completed in 30 months.
BPCL said it is also looking at options to expand Numaligarh. The total capex guidance for FY-17 is ₹10,500 crore.
The company estimates it will need roughly ₹4,000 crore for the upgradation to BS VI fuel standards and ₹4,600 crore for the planned petrochemical complex at Kochi.
On the marketing front, BPCL said is on track to open 600 retail outlets in FY-16 against 700 in FY-15.