HPCL loses Rs 245 on every LPG cylinder as crude surges; domestic gas prices may rise

Tension across the world has pushed up crude oil prices sharply, and oil companies are bearing heavy losses as a result. Hindustan Petroleum Corporation Limited (HPCL) is currently losing Rs 245 on every LPG cylinder. There are fears that the burden may now fall on ordinary households as well.

HPCL's managing director said the loss could rise to Rs 327 per cylinder in November. The conflict in West Asia is behind the losses. Wars are on in several parts of the world, and this is why crude prices have soared. Oil marketing companies are taking the brunt.

According to the managing director, HPCL lost Rs 500 crore on LPG cylinder sales in the second quarter, from July to September. Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are currently selling domestic cylinders below the market price, which is why they are incurring heavy losses.

Costlier crude is not the only problem. Rising freight costs are also weighing on the companies' balance sheets. The company said the freight rate for Suezmax tankers was $4 per barrel in the first quarter and has now reached $9 per barrel. HPCL is also considering emergency purchases in view of the present situation, which adds to the burden.

HPCL announced its quarterly results last week. The company posted a net profit of Rs 3,625.22 crore in the second quarter. In the first quarter, it had recorded a net loss of Rs 12,264.67 crore. Year on year, however, its profit fell 6.1 per cent. In the same quarter last year, its profit was Rs 3,859 crore.

Revenue from operations rose 26.1 per cent year on year to Rs 1,39,140 crore. The company had earned Rs 1,10,323 crore last year. In the present circumstances, the question being asked is whether LPG prices will have to be raised to make up for the losses.