State-owned Bharat Petroleum Corp Ltd (BPCL) today reported a widening of its net loss

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to Rs 2,561.8 crore for the quarter ended June 30, as the government did not fully compensate it for selling fuel below cost.

BPCL's net loss in the April-June quarter, at Rs 2,561.89 crore, was higher than the net loss of Rs 1,718.1 crore it suffered in the corresponding period of the previous fiscal, the company said in a statement.

BPCL lost about Rs 12,290 crore on selling diesel, domestic LPG and kerosene at government-controlled rates during the quarter.

Of this, it got Rs 3,409.05 crore from upstream firms like ONGC and another Rs 3,524.46 crore from the government by way of cash subsidy.

Under the subsidy government's sharing mechanism, upstream companies meet one-third of the under-recoveries that retailers like BPCL make on selling fuel at a government-controlled cost, while the government compensates the OMCs for approximately 50 per cent of the cost. The remaining losses have to be absorbed by the fuel retailers.

"The net under-recovery (revenue loss after considering government subsidy and upstream support) was Rs 3,356 crore in Q1, up from Rs 1,584 crore of the previous year," BPCL Director (Finance) Sudhir K Joshi said.

The company, he said, is currently losing about Rs 4 per litre on diesel, Rs 23 a litre on kerosene and Rs 274 per 14.2-kg LPG cylinder.

It is, however, making a marginal profit on petrol.

BPCL earned USD 3.02 on turning every barrel of crude oil into refined petroleum products (fuel) in the April-June quarter, as compared to a gross refining margin of USD 3.57 per barrel in the corresponding period of the previous fiscal.

Revenue soared from Rs 34,553.4 crore for the quarter ended June 30, 2010, to Rs 46,566.93 crore in Q1 this fiscal.

BPCL's staff cost of Rs 657.43 crore includes Rs 93 crore toward its estimated liability on a Voluntary Retirement Scheme for its employees.

BPCL said fuel sales in the April-June quarter rose by 5.5 per cent to 7.83 million tonnes from 7.42 million tonnes a year ago.

The increase in sales was mainly seen for petrol-retail (4.87 per cent), diesel-retail (9.72 per cent), ATF (14.32 per cent) and LPG (11.11 per cent), but was partly offset by a decrease in furnace oil (by 38.75 per cent) and naphtha (16.23 per cent) offtake, BPCL added.