BPCL to raise diesel exports

Bharat Petroleum Corporation (BPCL) is looking to increase its diesel exports through tendered term contracts, company officials said. The move is to ensure refinery utilisation levels are maintained, despite a decline in domestic diesel demand. On the discussions for privatisation of the company, N Vijayagopal, director-finance for BPCL, said the firm has not received any official communication from the government.

BPCL will soon float tenders to seek term contracts for diesel exports. Vijayagopal said the company is aiming to export 200,000 tonnes of diesel every month.

The firm witnessed a decline of 2.4 per cent in diesel volumes for Q2FY20. “The decline in diesel demand is a matter of concern for us. It may not reverse in the next six months,” he added. The company also plans to increase focus on rural areas for its fuel retailing business. “We want to take our share of rural markets in fuel retailing to 20-25 per cent in the next four years. It is currently at 15 per cent, lower than that of our nearest competitor,” Vijayagopal said.

For the current financial year, BPCL has a capital expenditure plan of ~8,000 crore, of which it has spent ~4,000 crore. For the next financial year, BPCL looks to spend ~12,000 crore as capital expenditure.

Gross refining margins (GRMS) for the firm were at $3.38 per barrel, compared to $5.57 per barrel reported in the same quarter a year ago. Vijayagopal expects GRMS to improve in the next two quarters owing to the new International Maritime Organization (IMO) regulations. They require ships to switch to cleaner fuel starting January 2020. “We expect Q3 and Q4 GRMS to be better than the first half,” he said.

On adoption of the new corporate tax structure, Vijayagopal said, “We have a MAT (minimum alternate tax) credit of ~500 crore for the current financial year. Not sure if it is advisable to move to a different tax bracket.” He added a final decision is yet to be taken. However, the company is unlikely to go for a change this year.