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G.K. Nair

Kochi , Aug. 11

THE rising prices in the petroleum industry seem to be taking its toll on the units in the fertiliser and power sector using its downstream products.

Added to this, the high rate of entry tax in Kerala, is also helping the refineries to fix higher prices.

A look at the annual reports and balance sheets of the petroleum companies and their refineries would show that even with a marginal increase in crude throughput and sales turnover, their profits have swollen.

For instance, the crude throughput of Kochi Refineries Ltd (KRL) during the last fiscal increased by 0.78 million tonnes (mt) to 7.58 mt from 6.80 mt in 2001-02. The turnover has gone up by 55 per cent to Rs 10,480 crore from Rs 6,758 crore, while the PAT has surged by 560 per cent to Rs 456 crore from Rs 69 crore.

According to the company's Chairman, "the increase was mainly due to higher selling prices and increase in sales volume".

According to the audited financial results of KRL, the gross refining margin during 2002-03 was Rs 1,490 per tonne, against Rs 686 per tonne in 2001-02. The reason attributed is "increasing trend in prices".

The combined crude throughput of BPCL has shown a drop in 2002-03 to 8.71 mt from 8.77 mt in the previous fiscal and yet its net profit went up by over 80 per cent. The net profit of IOC last fiscal had also shown an increase of over 110 per cent, industry sources told Business Line.

One of the worst hit units by the "higher selling prices" in Kerala is the ailing Fertilisers and Chemicals Travancore Ltd (FACT), the sources said. It requires 1.3 lakh tonnes of furnace oil per annum. The oil companies fix a price slightly below the landed cost plus the 30 per cent entry tax. And, with imports being unviable, the State Government is losing revenue from entry tax and gets only the 15 per cent sales tax.

Thus, by raising the entry tax from 10 per cent in 1998 to 30 per cent last year, the Government has helped the refinery to keep its prices slightly below the landed cost of furnace oil and make higher profits, they alleged. "Because of this discriminatory taxation FACT is losing around Rs 3,000 on every tonne of furnace oil", they alleged.

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