Hindustan Petroleum posts net loss due to under-recoveries

State-owned Hindustan Petroleum Corporation Ltd. (HPCL) posted a net loss of Rs3,364.48 crore (US$637.3 million) for the quarter that ended September 30 as a result of the Indian government’s failure to provide compensation for the losses it incurred on subsidized fuel sales. HPCL Director (Finance) B. Mukherjee said that the company had a net profit of Rs2,089.61 crore (US$395.8 million) for the July-September quarter of the 2010-11 fiscal year. He explained, “The loss is essentially on account of the under-recoveries (revenue loss) that we had to absorb.” The three state-owned fuel retailers, Hindustan Petroleum Corporation Ltd., Indian Oil Corp. (lOC) and Bharat Petroleum Corp. Ltd. (BPCL), are all mandated by the Indian government to sell diesel fuel, LPG and kerosene at rates that are below prevailing international market prices. Assistance from upstream companies like ONGC and a cash subsidy promised by the government are supposed to partially make up for the losses, and the three fuel retailers are expected to shoulder the rest. Mukherjee said, “We had a total under-recovery (revenue loss) of Rs4,686 crore (US$887.7 million) on selling diesel, domestic LPG and kerosene below cost in the July-September quarter. Of this, Rs1,561 crore (US$295.7 million) came from upstream firms and the rest Rs3,125 crore (US$592.0 million) had to be booked on our books.” (November 2, 2011)