Oil cos in red sea of losses

HPCL, on the other hand, posted a net loss of Rs 1,077.75 crore for the quarter-ended December 2005 as compared to a net profit of Rs 235.92 crore for the same quarter in 2004-05. Total income (net of excise) has increased to Rs 18,311.34 crore for the third quarter in current fiscal from Rs 16,272.83 crore in the year-ago period.

‘‘If oil companies continue to perform like this, their valuation will be affected. Their networth will also be eroded,’’ said an analyst tracking the oil sector. The government has barred fuel retailing firms from raising prices in line with increases in crude oil costs. This has led to the losses in the oil sector.

Last week, Indian Oil Corporation posted a net loss of Rs 5.83 crore for the quarter-ended December 2005 as compared to a net profit of Rs 1,286.76 crore in the same quarter last year.

‘‘Financial results of the nine months have been adversely affected on account of high crude oil and product purchase prices which could not be fully passed on to the consumers,’’ BPCL said. The under recovery on HSD, MS, SKO (PDS) and LPG (domestic) was partially compensated by the upstream oil companies as advised by the government of India.

Accordingly, during the nine months Rs 2,100 crore has been accounted towards discount received for purchase of crude oil, LPG and SKO from ONGC and GAIL,’’ BPCL said.

The gross refining margin (GRM) of oil companies declined. In the case of BPCL, during the nine months ended December 2005 after adjusting share of under recovery on SKO and LPG was USD 2.41 per barrel (around Rs 801/MT) as compared to USD 5.22 per barrel (around Rs 1,777/MT) during the corresponding period of the previous year.