petrol price hike as retail losses increase

State-run Hindustan Petroleum Corp (HPCL) is considering a further increase in petrol prices as it struggles to cut down on retailing losses.

Talking to CNBC-TV18, B Mukherjee, director of finance at HPCL, he says, "We are losing about Rs 1.50 per litre. To cover up this loss, since, there are sales taxes too that need to be taken into account, there needs to be a price hike to the tune of Rs 1.82 per litre. And, that is the position of OMCs (oil marketing companies)."

The oil refining and marketing firm, which posted a quarterly loss of Rs 33.6 billion on Tuesday, is in talks with other retailers on the issue and a price increase could come as soon as within the next two weeks.

The company also said it is looking to buy overseas oil and gas assets in Australia and Africa, and may partner with other firms in that effort, he said, without giving more detail. HPCL owns stakes in three exploration blocks in Australia and Egypt.

Raising the petrol price by Rs 1.82 per litre would be an increase of 2.7%from the current Delhi price.

"It may happen. We will see," he replied, when asked if the increase was likely within the next two weeks.

HPCL and its fellow state oil product sellers Bharat Petroleum Corp Ltd (BPCL) and Indian Oil Corp last raised petrol prices by nearly 5% in September to ease their subsidy burdens, but added to stubbornly high inflation in Asia's third-largest economy.

The three state giants tend to move their prices in tandem.

India's headline inflation in September stood at 9.72% and has topped 9% for nearly a year, prompting the RBI to lift its policy lending rate last month for the 13th time since March 2010.

India granted autonomy to state-run firms last year to fix retail prices for petrol, but the government continues to control prices of diesel, cooking gas and kerosene. The government last allowed a diesel price increase in June.

Last week, BPCL posted a loss of Rs 32.3 billion and said results had been adversely affected by high crude oil and product prices that did not fully pass that cost on to consumers.

Meanwhile, a falling rupee, the Indian currency is down 11% against the dollar since a late July peak, adds to the imported oil bill for India's three big state oil marketers.

HPCL's net loss for the July-September quarter compared with net profit of 20.9 billion a year earlier. Net sales rose to Rs 370.3 billion, from 307.1 billion in the year-earlier quarter.

Gross under-recoveries for the quarter nearly doubled to 46.86 billion rupees, from Rs 24.24 billion a year ago, Mukherjee said.

Gross refining margins, a key measure of profitability, fell to USD 1.92 per barrel for the quarter, from USD 2.66 a barrel in the same quarter last year.

Shares in HPCL, valued by the market at USD 2.3 billion, ended 0.4% higher, outperforming a broader market that ended 1.3% lower. The stock has dropped 14.6% in the year to date, in line with the main stock index.