New Delhi: Hindustan Petroleum Corporation Ltd (HPCL) reported a net loss of Rs 2,172.14 crore on Thursday in the July-September quarter. The loss in the second quarter of the current fiscal was despite adjusting a one-time grant that the government had announced on October 12 to make up for most of the losses that the oil PSUs had incurred on selling cooking gas LPG below cost in the last two years.
State-run OMCs HPCL, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) did not revise petrol, diesel and LPG prices since early April this year despite a rise in input cost. This was with a view to helping the government contain inflation, which was already above the comfort zone.
This is the first time that the company has posted a back-to-back quarterly loss. HPCL had reported a huge net loss of Rs 10,196 crore loss for the June quarter of the current fiscal. The company had posted a net profit of Rs 1,923.51 crore in the September quarter of the last year, according to the company's filing to the stock exchanges.
The government had on October 12 extended a one-time grant of Rs 22,000 crore to the three state-run fuel retailers to cover for the losses they incurred on selling domestic cooking gas LPG below cost in the last two years.
HPCL said it got Rs 5,617 crore "to compensate under-recoveries incurred on the sale of domestic LPG during the financial year 2021-22 and current period, which has been duly recognised in July-September 2022."
The three firms had reported a combined net loss of Rs 18,480 crore in the first quarter (April-June) of the current fiscal.
While the government regulates cooking gas rates, petrol and diesel prices are deregulated and oil companies are not compensated for any losses oil companies incur on them. The three firms, who are supposed to revise petrol and diesel prices daily in line with cost, haven't changed the rates for over six-and-half-months now — the longest freeze in rates since fuel pricing was deregulated.
Oil Minister Hardeep Singh Puri had, however, stated on November 2 that his ministry would take up the issue of compensation for petrol and diesel losses with the Finance Ministry.
For the first half of the current fiscal, HPCL now has a cumulative standalone net loss of Rs 12,369.08 crore, double the Rs 6,683.14 crore net profit it had earned in the full 2021-22 (April 2021 to March 2022) fiscal.
HPCL said it earned USD 12.62 on turning every barrel of crude oil into fuels during April-September compared to a gross refining margin of USD 2.87 a barrel.
"This is before factoring the impact of special additional excise duty and road and infrastructure cess levied on export of select petroleum products effective July 1, 2022," HPCL said. "During this period, due to the depressed marketing margin on motor fuels (petrol and diesel) and LPG, the profitability is impacted," said HPCL.
The firm also booked a Rs 1,548.51-crore foreign exchange loss in the period. Revenue from operations soared 30 percent to Rs 1.13 lakh crore in July-September, the filing showed. HPCL sold more petroleum products domestically in Q2 (9.87 million tonnes versus 8.79 million tonnes last year) and refined more crude oil (4.49 million tonnes as opposed to 2.53 million tonnes in Q2 of FY22).
Later in a statement, HPCL said, "With the changed input cost dynamics during Q2 FY22-23, the company was able to negotiate better prices and partially mitigate the effect of high costs. Nonetheless, high input costs and consequent depressed marketing margins continued to impact the profitability."
The firm earned USD 8.41 on turning every barrel of crude oil into fuel in July-September as compared to a gross refining margin of USD 2.44 a year back.