New Delhi, Jan. 29: Indian Oil Corporation (IOC) today reported a 76 per cent decline in third-quarter profit after the government failed to provide sufficient compensation for selling fuel below cost.
Net profit was Rs 697 crore for the three months ended December 31 compared with Rs 2,960 crore a year ago.
Revenue losses may erode IOC’s ability to invest in crude processing and pipeline projects overseas in Nigeria and Turkey, said analysts.
Net sales rose to Rs 65,225.72 crore during the December quarter from Rs 61,301.67 crore a year ago.
Indian refiners benefited from the subsidies, while their overseas peers such as Valero Energy Corporation of the US and South Korea’s SK Energy reported losses after the global downturn crimped demand.
Indian Oil received government compensation for part of the losses incurred on selling kerosene and cooking gas at lower rates.
The state-run refiner will get Rs 7,100 crore from the government for the year ending March.
IOC received Rs 4,480 crore during the quarter under review, according to a company statement.
Earlier, S. Sundareshan, additional secretary in the oil ministry, had said the government would give a cash prop of Rs 12,000 crore to the three PSU refiners — IOC, HPCL and BPCL — instead of issuing bonds as compensation.
Indian Oil plans to increase spending by 7.4 per cent to Rs 14,500 crore in the next financial year to build its refining capacity.
The refiner plans to expand processing capability by 33 per cent by 2012.
ONGC bid
ONGC Videsh Limited (OVL) today joined hands with Spain’s Repsol and Malaysia’s Petronas along with IOC and Oil India Ltd to bid for Venezuelan oil blocks.
The Latin American nation is offering a maximum 40 per cent stake in the development of oilfields in the Orinoco belt, and the balance will be held by Venezuela’s state oil company, Petroleos de Venezuela.
Repsol and Petronas will hold a 25 per cent interest, while OVL will hold 10.1 per cent. IOC and OIL would have 2.45 per cent each.
The project aims to turn the Orinoco belt’s tar-like crude into oil for exports. The region is expected to produce around two lakh barrels a day (10 million tonnes a year).
The initial investment is estimated at $10-20 billion a year.