State-run oil marketing and refining company Hindustan Petroleum Corporation (HPCL) today reported a net loss of Rs 1,884.29 crore for the quarter ended June 30 due to higher under-recoveries on petrol, diesel, LPG and kerosene.

The company had posted a profit of Rs 649 crore for the corresponding period of 2009-10.

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The company's gross refining margin (GRM) was $3.72 per barrel for the first quarter of 2010-11, compared to $5.71 per barrel during the same period last fiscal.

"The loss during the quarter is primarily on account of absorption of under-recoveries on the sale of sensitive petroleum products amounting to Rs 2,939 crores during the quarter," HPCL Finance Director B Mukherjee told reporters here.

Under-recovery is the term used by the state-run oil marketing companies for losses incurred on selling petroleum products below market price.

"As of today, the company is selling diesel at a loss of Rs 2 a litre, kerosene at Rs 15 per litre and LPG at (a loss of) about Rs 193 per cylinder, while there is no loss on petrol as the product price has been deregulated by the government," Mukherjee added.

Upstream companies like ONGC, Oil India and GAIL shared one-third of the under-recoveries by contributing Rs 1,470 crore.

However, none of the state-run oil marketing companies were given compensation in the form of bonds or cash by the government for the first quarter as was the practice in the last few years.

"We have heard that the Oil Ministry has asked for a minimum 50 per cent compensation as cash from the Finance Ministry, but in this quarter, we did not get any government support," Mukherjee said.

HPCL Chairman Arun Balakrishnan said that one of the crude units at the Vizag refinery, which has been shut down for revamp, will be operational by mid-August after a delay of a few weeks. The Vizag refinery has an annual capacity of 1.5 lakh barrels per day.

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