New Delhi: State-run Indian Oil Corp. Ltd (IOC) on Tuesday said its fiscal fourth-quarter profit surged 40% to Rs5,218 crore, driven by higher refinery margins and inventory gains.

IOC had reported a profit of Rs3,721 crore in the corresponding year-ago period.

Chairman Sanjiv Singh told reporters that the country’s largest refiner processed the highest amount of crude oil in 2017-18. IOC also registered Rs3,442 crore as inventory gain in the quarter ended March, compared with Rs2,634 crore in the corresponding period of 2016-17.

This comes against the backdrop of diesel and petrol prices on 22 May reaching a record high of Rs68.08 per litre and Rs76.87 per litre, respectively in Delhi. IOC and the two other state-run firms—Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd—refrained from raising prices while the Karnataka poll campaign was on.

The gross refining margin— the difference between the cost of processing crude and the revenue earned from the sale of finished products—was $8.49 per barrel in 2017-18, against $7.77 per barrel in 2016-17.

IOC posted an 11.72% rise in net profit to Rs21,346 crore for 2017-18, from Rs19,106 crore in 2016-17. Its also registered a 13.69% jump in annual revenue to Rs5,06,428 crore for 2017-18.

“Indian Oil sold 88.763 mmt (million metric tonnes) of products, including exports, during 2017-18," Singh said. “Our refining throughput for FY2017-18 was 69.001 mmt and the throughput of the corporation’s countrywide pipelines network was 85.675 mmt during the same period."

The IOC board also recommended a final dividend of Rs2 per share for 2017-18. This is in addition to the interim dividend of Rs19 per share paid earlier.

This comes at a time of growing demand for excise duty cut on petrol and diesel, given the record-high automobile fuel prices. The cost of the Indian basket of crude, which averaged $47.56 and $56.43 per barrel in FY17 and FY18, respectively, rose to an average of $69.30 in April 2018, according to data from the Petroleum Planning and Analysis Cell. The price was $77.04 a barrel on 21 May. The Indian basket represents the average of Oman, Dubai and Brent crude.

Analysts believe state-run firms may be spared a larger share in the country’s fuel-subsidy burden.

Moody’s Investors Service on Tuesday said while state-run Oil and Natural Gas Corp. Ltd and Oil India Ltd could be asked to bear part of the government’s fuel subsidy for oil, if prices stay above $60 per barrel for the fiscal year ending March 2019, “these companies have been asked to share less than 1% of total fuel subsidies since fiscal 2012, and it is unlikely that the proportion of such costs will rise".

Given India’s energy security strategy, the state-run firm has been diversifying its crude sourcing and included 16 new crude types in its basket including the oil from the US. IOC has also been eyeing fuel retail and domestic cooking gas marketing in Myanmar and Bangladesh.

IOC plans to double its 80.7 million tonnes per annum (mtpa) refining capacity through its 11 refineries, to around 150 mtpa by 2030.

As part of this strategy, the firm is also a member in the Indian consortium partnering with the world’s biggest oil producer, Saudi Arabian Oil Co., or Saudi Aramco, to set up the largest integrated global refinery and petrochemical complex at Ratnagiri in Maharashtra at an investment of $44 billion.

PTI contributed to this story

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