Refinery throughput cut to 86% of capacity after second Covid wave: N Vijayagopal, director of finance, BPCL

We had been very aggressive in including retail items over the past two years (FY20 and FY21) given our requirement to seize rural markets which had been out of our ambit.

With the second wave of Covid-19 impacting demand by 30% in Might in comparison with April or Might in any yr earlier than the pandemic, Bharat Petroleum (BPCL) has decreased refining capability to 86% this month from 105% in January-March 2021. N Vijayagopal, director of finance, BPCL tells Vikas Srivastava they anticipate demand to rise after June given the advance in product cracks, that are increased in Q1FY22 in comparison with one of the best achieved in FY21. Edited excerpts.

What has been the influence of the Covid-19 second wave on demand and the way is BPCL dealing with it?

The second wave has impacted demand by 30% in Might in comparison with any regular month of April or Might earlier than Covid-19. Given such type of demand destruction, we’ve got decreased the throughput to 86% of the title plate capability in comparison with 105% achieved in January-March quarter of 2021. Nonetheless, the plus level is enchancment in product cracks (distinction in worth of a barrel of crude and a barrel of crude merchandise) within the Q1FY22. The product cracks are even increased than Q4FY21, which was the best achieved in complete of FY21.

Are you trying to improve exports to tie up demand-related points?

The drop in demand in April-Might 2021 shouldn’t be as extreme as in comparison with the identical months in 2020. Additionally, with lockdowns being state-centric, the monetary influence has been marginal. So we don’t see exports as a beautiful choice, for the reason that product cracks aren’t commercially viable. For us to make industrial positive factors, we should export each MS and HSD, which isn’t the case as of now. Additionally, given our refinery configuration, we’re versatile to function at any stage. So we determined to scale back the throughput capability as an alternative of exporting at decrease margins.

What might have led to addition of two,400 retail items this yr, when demand was affected nearly the entire of FY21?

We had been very aggressive in including retail items over the past two years (FY20 and FY21) given our requirement to seize rural markets which had been out of our ambit. We’ve added round 3,800 shops within the final two years. We had been earlier focussed on metros and cities given our wealthy legacy of Shell retailers. The additions weren’t impacted by the pandemic as a result of we imagine it is not going to final eternally, and additions had been extra of a long-term strategic choice. Our share of MS and HSD following the additions will enhance to 32% within the subsequent two to a few years from 29% at current. Going forward we is probably not as aggressive as we had been within the final two years in retail expansions.

What are your capex plans for FY22 and for enlargement of main initiatives held up in FY21?

We’ve earmarked Rs 12,000 crore for FY22, which is Rs 1,000 crore greater than final yr. This can be used for refinery and petrochemical plant enlargement. In FY21, we had decreased the tempo of the initiatives, however there was no embargo on initiatives. Nonetheless, we’re not taking over any new initiatives like Rasayani refinery close to Mumbai, which requires enormous quantity of funding. So we’re holding up on new initiatives given the uncertain demand situation within the close to future.

How is the BPCL privatisation positioned as of now?

Though, this isn’t the official view, however what I can say within the present scenario [is that] there are two pre-steps which might be in course of earlier than the monetary bids might be invited. If the whole lot goes as per our plan, we anticipate the pre bid formalities to recover from by June. After that, the monetary bids might be submitted by August. The SPAs might be signed round September, and the switch of money could occur by December.