State-owned Hindustan Petroleum Corp Ltd (HPCL) reported 12-fold jump in net profit during three

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months ended December 31 on receiving government subsidy on fuel sales for the previous two quarters.

Net profit in the October-December quarter this fiscal soared to Rs 2,725.18 crore, as against Rs 211.03 crore in the year-ago period, HPCL Director (Finance) B Mukherjee told reporters here.

"We received government compensation (to make up for part of the revenues the company lost on selling diesel, domestic LPG and kerosene below cost) for second and third quarter during the quarter under review," he said.

For the first nine months this fiscal, HPCL reported a net loss of Rs 3,719.56 crore as part of the losses on fuel sales not covered by the government compensation.

HPCL lost Rs 21,316 crore in revenue on diesel, domestic LPG and kerosene sale from April-December. Of this, it got Rs 8,080 crore from upstream firms like ONGC and another Rs 9,857 crore from the government in form of cash subsidy.

"After accounting for upstream assistance and government subsidy, we had to absorb Rs 3,379 crore of net under recovery on fuel sales," Mukherjee said, adding that the company had absorbed Rs 2,260 crore revenue loss in the same period of the previous fiscal.

The receivables from the government includes HPCL's share from the Rs 15,000 crore that the finance ministry agreed to give to make up part of the revenue that fuel retailers lost in the October-December quarter.

Previously, the government had sanctioned Rs 30,000 crore to cover for about half of revenue that retailers HPCL, Indian Oil and Bharat Petroleum lost on fuel sales in April-September period.

HPCL earned $4.58 on turning every barrel of crude oil into petroleum product in October-December quarter, as against $5.18 per barrel gross refining margin it earned in the same period a year ago, Mukherjee said.

Turnover increased to Rs 43,483.41 crore in Q3 from Rs 33,902.10 crore a year earlier.

He said domestic sales of petroleum products increased to 20.43 million tonnes, a growth of 8.1 per cent against the industry average growth of 5.1 per cent.

The refineries at Mumbai and Visakh processed 12.23 million tonnes of crude during April-December 2011 against 10.43 million tonnes last year.

"The loss for the period April-December 2011 was Rs 3,719.56 crore as against a profit of Rs 416.35 crore for April-December 2010, mainly due to absorption of higher under- recoveries on sale of sensitive petroleum products," Mukherjee said.

Besides absorbing Rs 3,379 crore of revenue loss, the interest cost for the period was also higher at Rs 1,707 crore, he added.