The oil crisis has begun to spill over onto infrastructure investments. The country?s second-largest public sector fuel retailer, Hindustan Petroleum Corporation Ltd (HPCL), has decided to put on hold Rs 31,570-crore worth of capital investments. The company has cited ?severe financial crisis? to the petroleum ministry as the reason for deferring investments in these capital projects.

?No capital commitments will be made for any new projects until (the) financial situation improves. For projects with an estimated cost of around Rs 31,500 crore, only feasibility study will be undertaken and all other activities have been deferred,? HPCL informed the petroleum ministry in a recent letter.

The projects on hold include a Rs 11,000-crore capacity expansion at the Visakhapatnam refinery, a Rs 4,900-crore delayed cocker unit, a Rs 9,000-crore aromatics unit and a Rs 6,000-crore naphtha cracker.

After announcing a 28% dip in net profit in 2007-08 on Thursday, HPCL chairman & managing director Arun Balakrishnan said the company is left with only around Rs 3,000 crore in cash–just enough to meet its commitments on maintaining uninterrupted fuel supplies until the end of July.

?If the situation continues to be the same, without any increases in petrol and diesel prices or duty cuts, we too (like IOC) will have to take a decision on restricting fuel supplies to pumps and cutting down on imports of petrol and diesel,? he warned.

But for excess tax provisioning of Rs 409 crore (which has been reversed), the company would have ended with a net loss in Q4 2007-08. However, HPCL?s net profit at Rs 384.51 crore during the period is still down 30% over the same period a year earlier, when it recorded a net profit of Rs 549.54 crore

HPCL?s PAT for FY08 stood at Rs 1,135 crore, against Rs 1,571 crore the previous fiscal. Turnover, however, increased by 13.5 % to Rs 1,03,837 crore from Rs 91,448 crore in FY07.

The liquidity crunch has also forced HPCL to cut its proposed outlay of plan projects for 2008-09 from the earlier Rs 3,500 crore to Rs 2,100 crore. Non-plan expenditure for the current fiscal will also be curtailed from Rs 2,100 crore to Rs 1,250 crore.

The company said interest cost in the latest fiscal rose to Rs 792 crore from Rs 370 crore the previous year, mainly due to higher borrowings to fund working capital requirements, again because of under-recoveries on the sale of fuel.

HPCL?s under-recoveries for the year 2007-08 amounted to Rs 3,110 crore against Rs 772 crore over the earlier year. This is after accounting for one-third compensation from the upstream companies and the oil bonds issued by the government.