State-owned Hindustan Petroleum Corporation Ltd (HPCL) has announced an ambitious Rs 750 billion capital expenditure plan over the next five years, with an annual spend of approximately Rs 140-Rs 150 billion. The plan aims to drive expansion and diversification across various segments.

Rajneesh Narang, HPCL's Director of Finance, detailed the allocation of the capex, noting that around 25-30% will be directed towards renewable energy and gas-based projects, while another 20% will be invested in refinery expansion. The remaining funds will be allocated to other downstream marketing projects. The company?s focus for the next five years will be on enhancing its renewable energy portfolio, expanding its gas business, and developing value-added products in the downstream segment, with a significant push towards solar and hybrid energy models.

HPCL is also set to expand its refinery in Visakhapatnam, aiming to increase capacity from 8.3 million tonnes per annum (MMTPA) to 15 MMTPA. The refinery expansion in Rajasthan is expected to be completed by March next year, with production set to commence soon after. Narang noted that approximately 74% of the physical work on the Rajasthan refinery has been completed, with Rs 370 billion already spent out of the total Rs 730 billion budget.

Upon completion of the Vizag refinery's bottom upgradation, HPCL anticipates an incremental gross refining margin (GRM) of $3-$4 per barrel. As of the end of September, the company reported having 23 days of crude inventory and 30 days of marketing inventory.

Addressing concerns about the potential impact of the common carrier regulation, HPCL stated that there has been no official communication on the matter and does not foresee any significant disruption to its pipeline business.

Despite the volatility in the global crude oil market, HPCL does not anticipate major changes in its crude sourcing strategy but remains vigilant in identifying crudes that could add more value to its operations. The Vizag refinery, Narang added, will be equipped to process more heavy crude, and the company will continue exploring opportunities in the crude market.

In the quarter ending September, HPCL reported a consolidated net profit of Rs 58.26 billion, a significant turnaround from the Rs 24.75 billion loss in the same period last year, driven by improved marketing margins. The company's average GRM for April to September stood at $10.49 per barrel, down from $12.62 per barrel during the corresponding period last year, according to an exchange filing. (financial express)