Oil marketing cos to pay refinery transfer prices fully from April 1
Discounts ofRs 142.88 crore made in first two quarters of the fiscal to be reversed in third quarter.
Impact of fullRTP without discounts for full fiscal to be about Rs 290 crore.
New Delhi, Nov. 17
The refining arm of ONGC, Mangalore Refinery and Petrochemicals Ltd (MRPL), would no longer sell domestic liquefied petroleum gas and kerosene under public distribution system (PDS) to state-owned oil marketing companies (OMCs) at a discount.
Discounts to OMCs such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum have been discontinued with retrospective effect from April 1, 2006, MRPL said in a statement on Friday.
This announcement saw the company shares touch a day's high of Rs 43.50. The shares finally closed at Rs 41.85.
In a statement to the Bombay Stock Exchange, MRPL said that the OMCs have now agreed to make payment of full Refinery Transfer Prices (RTPs) towards sale of LPG and kerosene by it to them with effect from April 1 without deducting any discounts. The company had accounted for discounts of Rs 142.88 crore during the first two quarters of the current financial year, pending receipt of formal confirmation from OMCs, towards payment of full RTP without discount.
"These discounts will now be reversed in the third quarter resulting in a credit of Rs 142.88 crore in the third quarter results. The impact of receiving full RTP without discounts for the full financial year would be approximately Rs 290 crore," MRPL said.
Standalone private and PSU refiners such as Reliance Industries Ltd (RIL), MRPL, Chennai Petroleum, Numaligarh Refinery (NRL) and Kochi Refineries were extending discounts on the petroleum products sold by them to retailers to partially offset the under-realisation suffered by retailing companies because of selling the products below the cost price.
With RIL declining to extend any discounts for the current fiscal, MRPL had approached the Petroleum Ministry seeking level-playing field on the issue.
The Petroleum Ministry, after considering MRPL's request, felt that the standalone refiner could seek refund of discounts on LPG and kerosene (SKO) from retailing oil companies with effect from April 1.
MRPL saw its net profit during the second quarter plummet 94.58 per cent due to a sharp reduction in product prices, increased exports, and discounts on LPG and SKO to OMCs.
The company earned a lower net profit of Rs 9 crore for the second quarter of the financial year 2006-07 (Rs 166 crore in the corresponding quarter).
The discounts on LPG and SKO accounted during the quarter was Rs 77 crore and for the first half of the fiscal (cumulative for six months) Rs 142.88 crore.