HPCL can generate cash surplus without government help in Jaipur's refinery project

HPCL can generate cash surplus without government help in Jaipur's refinery project

JAIPUR: The refinery project would generate cash surplus for Hindustan Petroleum Corporation (HPCL) even without the Rajasthan government financial assistance of Rs 3,736 crore annually to the company for 15 years. The findings that have come out in the preliminary report of PwC has firmed up the state government stand for refusing to extend interest-free loan to HPCL.

From starting of operations, the profit earned by the main promoter HPCL would be above Rs 2,000 crore annually. Except in the second year, where cash surplus is estimated to be Rs 1500 crore, the company is expected to register increase in net profits every year. Moreover, these evaluations are also reflected it the report prepared by the HPCL consultant, SBI Caps. PwC was appointed by the state government to review the refinery project. It submitted its preliminary report on March 31 based on which HPCL was asked to reconsider its conditions. The final report will be submitted by the PwC next week after which both state government and HPCL will hold discussions on the future course of the project.

Several flaws in financial planning of HPCL were also reported in the PwC report. The company has kept sales stagnant while showing increase in the operating cost. In most cases the cost estimations by the company on several fronts have been taken on a higher side.