HPCL loss seen at Rs 500 cr

15 May 2009, 0148 hrs IST, Rajeev Jayaswal, ET Bureau

NEW DELHI: State-run fuel retailer Hindustan Petroleum Corp (HPCL) may post a net loss of Rs 400-500 crore in 2008-09, despite a bailout package being offered by the government.

However, the package will help the two other public sector oil marketing companies, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL), post net profits, said three persons familiar with the matter.

The bailout package includes oil bonds worth around Rs 10,000 crore and upstream contributions of about Rs 1,000 crore from ONGC, Oil India and GAIL India in the form of discounts on crude oil and LPG sourced by the three fuel retailers.

HPCL had suffered huge inventory losses in 2008-09, when it bought fuel from other refiners and sold it through its outlets at lower rates after the government cut pump prices, besides its share in the combined losses of Rs 103,182 crore suffered by the three fuel retailers, said a government official who asked not to be named.

HPCL did not respond to an email query from ET.

“The company was hit harder as it had to buy refined products (petrol, diesel, kerosene and liquefied petroleum gas) in large quantities from the market to ensure uninterrupted supply of fuel to customers,” said an HPCL official, requesting anonymity. HPCL had to buy refined fuel products from the open market as it did not have enough refining capacity, he said.

HPCL has only two refineries—one in Mumbai (capacity of 5.5 million tonnes per annum) and the other in Visakhapatnam (7.5 mmtpa). It had to purchase and stock additional quantities of fuel from the open market during the recent strike by IOC and BPCL staff. HPCL staff did not take part in the strike.

IOC, BPCL and HPCL are yet to get the final instalment of oil bonds for the fourth quarter of 2008-09, said another government official. “Once bonds are issued, companies will be asked to review their accounts and deficits will be met though upstream discounts as per the direction of the Cabinet,” he said, requesting anonymity.

The government is expected to issue the oil bonds before the three companies announce their annual results in the last week of May.