Bharat Petroleum Corporation Ltd (BPCL) Q3 FY22 Earnings Concall Transcript

Bharat Petroleum Corporation Limited (NSE: BPCL) Q3 FY22 Earnings Concall dated Feb. 02, 2022

Corporate Participants:

Varatharajan Sivasankaran — Research Division – Research Analyst

Piyush Borania — Senior Manager of Pricing and Insurance

Vetsa Ramakrishna Gupta — Director of Finance

Analysts:

Amit Rustagi — UBS — Analyst

Yogesh Patil — Reliance Securities — Analyst

Sumeet Rohra — Capital PT Limited — Analyst

Manoj Bahety — Carnelian Capital — Analyst

Sabri Hazarika — Individual Investor — Analyst

S. Ramesh — Nirmal Bang — Analyst

Kirtan Mehta — BOB Capital — Analyst

Nitin — YES Securities — Analyst

Vishnu Kumar — Spark Capital — Analyst

Saurabh Handa — Citigroup — Analyst

Pinakin — JPMorgan — Analyst

Mayank — Morgan Stanley — Analyst

Rajiv Agarwal — Sterling Capital — Analyst

Avadhoot Sabnis — InCred Capital — Analyst

Kirtan Mehta — BOB Cap — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to BPCL 3Q FY ’22 Earnings Conference Call hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stockbroking. Thank you, and over to you, sir.

Varatharajan Sivasankaran — Research Division – Research Analyst

Thank you, Tanvi. Good morning, everyone. I would like to welcome all the participants this morning and the senior management team of Bharat Petroleum Corporation Limited for this Q3 FY ’22 earnings call.

I’d like to hand over to Mr. Piyush Borania to introduce the senior management and take the call forward. Piyush?

Piyush Borania — Senior Manager of Pricing and Insurance

Thanks, Mr. Varatharajan. On behalf of the BPCL team, I welcome you, one and all, to this post Q3 results con call. Before we begin, I would like to mention that some of the statements that we would make during this con call are based on our assessments of the matter, and we believe that these statements are reasonable. However, their nature involves number of risks and uncertainties that may lead to different results. Since this is a quarterly result review, please restrict your questions to the Q3 results.

I now request our Director of Finance, Mr. V.R.K. Gupta, who is leading the BPCL team for this call to make his opening remarks. Thank you, and over to you, sir.

Vetsa Ramakrishna Gupta — Director of Finance

Good morning, everyone. Welcome to the Q3 post results con call. Hope you were able to go through our results for the quarter gone by. We would like to highlight a few points relating to the past quarter performance. At the macro level, despite the risk of Omicron, the recent quarters have emerged quite promising for economic recovery. Though slower than expected, due to rapid expansion of vaccine [Indecipherable], both rural and urban, demand has also picked up. In MS, we have recorded the highest growth [Indecipherable] for Q3. Our regions have shown positive growth of over 3% in Q3, coupled by now at 36.64%. In HSD, BPCL decline was the lowest among the OMCs. During Q3, our market share growth in MS increased by a 0.40%, which is highest in the last 10 years and for HSD increased 0.33% in terms of market share. It is after 14, 15, that we have consistently closing market share at 29% among PSUs in MS during quarter 3. We have launched one of major digital initiative called UFill in retail segment. UFill is the touchless fueling solution, which was rolled out previous quarter. We are already surpassing an average of 2.5 lakhs per day in the 65 cities covering about 40 retail outlets. We are further expanding UFill to more markets. World is preparing for a shift from fossil fuels to renewables across the world.

India would be among the countries, which will continue to grow in fossil fuels some more time, but we understand that we have to eventually move to clean energy. BPCL is committed for net zero at scope one and scope two level emissions and aims to be net zero by 2040. As a pilot project, we have already floated EOI for 20-megawatt electrolyzer at Bina refinery to produce green hydrogen. Our investment in green hydrogen will further depend on the evolution of technology, cost and government policy on the same. BPCL has a target to create an RE portfolio of one gigawatt over five years and estimated capex of around INR5,000 crores for this pipeline. In the long term, our renewable [Indecipherable] has an aspiration to create a divestment portfolio of 10 gigawatt by 2040, which include solar and wind as our first priorities and also looking at hydrogen and biomass projects. To begin with, we have identified some land parcels that are available and could be made available in close proximity to our refineries and major stations. We are also open to explore other locations based on project economics. We have a plan to solarize around 50% of outlets by ’24, which will reduce that energy conversion from grid by almost 50% and help in reducing scope of two GHG emissions. BPCL has always been at the forefront of providing all forms of energy solution for personal and commercial mobility to our customers.

We have made plans for setting up 1,200 EV stations across cities and national highways within this calendar year and [Indecipherable] the course of next three to five years. We are committed to being a major participant in the acceleration of EV adoption in the country and in the overall course of eliminating rain [Indecipherable] for the EV consumers. Under gas business, we have been marginally successful, had won six GAs in 19 districts in the recently held 11th bidding round of PNGRB. We, along with our JVs, hold 33% market share presently in terms of sales in the CGD sector of the country and would be investing around INR22,000 crores for development of 23 years, including INR10,000 crores for the recent six GAs on stand-alone basis, along with our wholly owned subsidiary of BGRL. Construction of GAs is in full swing, and we have completed around 4,667-inch kilometer of steel pipeline, which will translate to around 380 kilometers in our new geographical areas, which we got [Indecipherable] in ninth and tenth round. We aim to commission 100 CNG outlets by fiscal year-end. Further, we currently dispersed CNG in 94 retail outlets and further by the financial year, and we aim to add another 300 CNG facilities in our existing MS and retail outlets. On our nonfuel consumer retailing, currently, we have around 303 In & Out stores, branded In & Out stores.

Our focus is to expand nonfuel retailing in urban and rural markets. This is going to be one of its kind omnichannel retailing of fuel and nonfuel products. Our rollout plan is on schedule for additional 1,000 modern digital format stores, working model trade stores along with the digital platform at our fuel station this calendar year, 30 of which shall commence operations by this financial year and by March ’22. BPCL shall leverage its vast network and reach to rural household to be one of the most significant retail chains in rural segment. Under petrochemicals, we have fully commissioned the power unit of PDPP, that is the acrylate unit in December 2021. With this, all the units of PDPP, the niche petrochemical project at Kochi are fully commissioned. BPCL is further studying the feasibility of having an ethylene cracker complex at Bina for production of bulk petrochemicals like LLDPE, HDPE and PP. Further, we have decided to discontinue the polyol project at Kochi. Instead, we are evaluating the option of putting a polypropylene unit. BPCL has been aggressive in adapting emerging technologies to leverage opportunities. And then with the current times and with the objective of making BPCL’s customer interfacing unit technology relevant, Project Anubhav has been initiated earlier. Initiatives under Project Anubhav includes a customer engagement platform called Hello BPCL, Sales Buddy, Urja chatbot, etc.

We have launched a one-stop advanced loyalty program in the last quarter and are planning to roll out on pan-India basis in the current quarter. By embedding intelligence in BPCL’s operation, our digital nerve center, IRIS, is helping BPCL to optimize its operational performance and efficiencies, enhancing security and safety and deliver the brand promise leading rated technology. Currently, IRIS is integrated with 18,000 retail outlets, all the 87 retail terminals, all the 53 LPG plants and 25,000 tank trucks. In case of other products, LPG will have a market share of 27% in Q3. In case of ATF, we grew by 33% as compared to Q3 of previous year. As we are primarily focused on the international sector, ATF sales is yet to pick up, and scheduled international freights are still not allowed to operate. With improved economic sentiments across the globe, increasing mobility, coupled with the reduced refinery runs has led to improvement in MS cracks to an average of $12.8 per barrel in Q3 from an average of $9.7 per barrel in Q2 of FY ’22. In case of HSD, lower exports from China, along with lower global inventory levels and winter heating demand have led to elevated cracks in HSD at $12.61 per barrel in Q3 from $8.13 per barrel in Q2 of FY ’22. When we compare Q3 versus Q2 on sequential basis of current financial year, the Indian basket of crude oil has increased to $78.72 per barrels from $72 per barrel in the previous quarter and the rupee almost hovering around INR74 per dollar. BPCL DRs have improved from $9.6 per barrel in Q3 as compared to $6.04 per barrel in Q2 of the current financial year.

The refinery throughput was at 160% of the nameplate capacity in Q3, means almost we have reached pre-COVID levels as compared to 104% for Q2 in the current year. The throughput for both the refineries was at 7.95 MMT for the quarter ended 31 December as compared to 7.16 MMT in Q2 of current financial year. The distillate yield in Q3 at 84.30% as compared to 86.45% for Q2 of the current year, particularly the revenue from operations stood at INR one lakh, 18,000 crores. Further, for the first time in history of BPCL, we crossed INR three lakh crores in revenue for the nine month period ended 31st December. The profit after tax stood at INR2,462 crores. Again, as the capex target of INR10,000 crores during the financial year, we have already spent over INR9,346 crores during the nine months ended 31 December 2021. This also includes BORL investment of INR2,472 crores. Our borrowing sale on 31st December stood at INR24,164 crores as compared to INR21,000 crores as on 30th September 2021. We are excluding the lease obligations of around INR8,000 crores. The debt equity ratio as of 31st December is at 0.5 as compared to 0.4 at the end of Q2. As of 31st December 2021, we have only around INR196 crores outstanding receivables from government of India that are under recovery for PDS SKO during the quarter gone by. On a consolidated basis, with respect to Q3 revenue from operations, stood at INR one lakh, 17,703 crores, while profit after tax stood at INR2,805 crores. And consolidated basis, the refinery throughput was to the tune of 9.94 MMT.

I now invite for questions and for any clarifications. Thank you.

Questions and Answers:

Operator

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Rustagi from UBS. Please go ahead.

Amit Rustagi — UBS — Analyst

Yeah. Thank you. Thank you sir for giving me opportunity and congratulations for posting these wonderful set of numbers. Sir, my first question relates to your capex program. So when we are moving towards the green energy initiatives, what is the kind of IRR we are targeting on these projects? And in the past two years, we have seen that we have refrained from announcing big projects because we were under privatization. But now suddenly, we are seeing a flurry of projects from BPCL. So do you think that the privatization process may not go through, and so we have initiatives on the project side now?

Vetsa Ramakrishna Gupta — Director of Finance

Let me answer the second question first. So in terms of privatization, as earlier also we have clarified, we don’t have any role in the entire process. Our role is submitting the information and open — further open information for the due diligence. Come to the second in terms of the projects, as a business, on a going constant basis, where you take up the project and when we are transitioning — happening from fuel to non-fuel, we should not delay any of the projects. And the second thing is that we have larger ambitions in terms of future growth and sectors of the organization. That was the reason we are exploring various projects like petrochemical, non-fuel retailing and including the renewables. And the first question, when you were asking the renewables, the total project outlay, what we are expecting is that in the next five years, we want to reach around 1,000 megawatt capacities with an estimated capex of around INR5,000 crores. When it comes to IRR, yes, definitely. If we did not commercially viable in any of the project, generally, we don’t take because there is no obligation to take any of the project if the IRR is commercially not viable. So generally, we take around 12% or 15% small projects. In case of larger projects, there are some intangible benefits or any obligation, maybe on the lower level thresholds we will take. But otherwise, if it is not commercially viable, then we don’t take up any projects.

Amit Rustagi — UBS — Analyst

Okay. Sir, that was helpful. And sir, second question relates to the LPG subsidies. So you mentioned that you have an outstanding of INR198 crores from the government. So is this including the outstanding for the December quarter as well? Or this is pertaining to the only previous quarters?

Vetsa Ramakrishna Gupta — Director of Finance

You see as per the subsidy mechanism, this includes the December ’21 quarter, whatever subsidy for the subsidy scheme, whatever we have to recover, that is outstanding.

Amit Rustagi — UBS — Analyst

Okay. But we have accounted for some subsidy for the third quarter as well?

Vetsa Ramakrishna Gupta — Director of Finance

Whatever is the subsidy mechanism, whatever eligible for BPCL, that we will account on quarterly basis.

Amit Rustagi — UBS — Analyst

Okay, sir, great. Thank you, sir. Thanks for answering my question. Best of luck.

Operator

Thank you. The next question is from the line of Yogesh Patil from Reliance Securities. Please go ahead.

Yogesh Patil — Reliance Securities — Analyst

Thanks for an opportunity sir. Sir, I will continue with the previous question. Sir, could you please tell us which category of LPG consumer is getting a subsidy through DBTL? Is it a BPL customer or PMUI or domestic? That is my first question.

Unidentified Speaker —

It is for the domestic customers, and it depends on the area, the geographical location. Just to clarify the previous question also, that subsidy, as DF just told that, as per the mechanism, it is being followed and the subsidy element is very less — like it’s not much. And it is including December. And depending on the geographical location for power plants for the distant areas or the location, the subsidy amount is decided for all customers.

Yogesh Patil — Reliance Securities — Analyst

Okay. And the second question related to device estimates for FY ’22 in yesterday’s budget. So the revised estimates for FY ’22 for direct benefit transfer to LPG customers this amount has been flashed by 73% compared to the budgetary estimates for the same period. So we are not able to understand in the rising crude price scenario who will absorb the burden of LPG and the recovery. And do you see increase in receivables in the future due to these under recoveries on HPG? So can you throw some light on this topic?

Vetsa Ramakrishna Gupta — Director of Finance

We are at two studies, a final print of finance bill. Maybe we can comment only after full study, what is the impact on this particular area. We have to study fully.

Yogesh Patil — Reliance Securities — Analyst

So for your information, I can provide you a number quickly. The budgetary provision for the FY ’22 was close to INR12,480 crores for DBTL. And now it has revised downward to the level of INR3,400 crores. So can you tell us who is going to absorb the burden of LPG under recoveries in this?

Vetsa Ramakrishna Gupta — Director of Finance

I cannot comment because this is a controlled product. What mechanism, the government of India will suggest later, that we are not clear once we get the final notification on this, how the budget will be shared or whether, in the long term, there will be any burden on us because, generally, if we see, the LPG prices in the peak summer, it will be on the downside and peak winter, it is on the upside. So we are not sure, on an overall basis, what is the mechanism of government of India is going to be. This is a controlled product. We cannot comment beyond.

Yogesh Patil — Reliance Securities — Analyst

And my next question is related to, again, the blending into the auto fuel. What is the proportion or the ratio of a blending petrol versus unblended petrol? Can you give us some numbers?

Unidentified Speaker —

So I can give you a number on, if we see, April to December, it’s around — it’s near about 7.5%. So that’s on the weighted average basis. And there are various — it could be a 5% blend, 10% blend. So depending on that, but I have just given you the weighted average figure that is 7% — to the tune of some 7.5%.

Yogesh Patil — Reliance Securities — Analyst

Sir, we are more interested into the blending petrol versus non-blending petrol — unblended petrol.

Unidentified Speaker —

So — yes, some cases, if petrol is not available at some particular point of location, maybe unblended petrol also is going to the market. But right now, a GAAP number we don’t have. Maybe we can calculate and provide that, April or December, how much unblended petrol has gone to the market.

Yogesh Patil — Reliance Securities — Analyst

Okay. And is this the right understanding, sir, that private oil retailers do not blend ethanol or biodiesel?

Unidentified Speaker —

Yes. They don’t blend.

Unidentified Speaker —

Obligation. They don’t have an obligation.

Vetsa Ramakrishna Gupta — Director of Finance

They don’t have any obligation, but we are not sure whether they are blended or not.

Yogesh Patil — Reliance Securities — Analyst

Thanks a lot, sir. That’s really helpful.

Operator

Thank you. The next question is from the line of Sumeet Rohra from Smartsun Capital PT Limited.

Sumeet Rohra — Capital PT Limited — Analyst

Yeah. Hi sir. Very good morning to you and the entire team at BPCL. Sir, firstly, my many congratulations on posting very healthy set of results in a very challenging environment. So sir, I’ve heard you in saying that our total receivables from government is only INR196 crores. Sir, the reason I touched upon this point is because, yesterday after the union budget, you would much appreciate that all the oil marketing companies actually got slammed by nearly 6% to 8% because there is obviously a fear — I mean there was a perceived fear, which categorially stated that the OMCs would bear this LPG burden. But now your view, sir, after clarifying this that the total receivable is only INR196 crores and the Saudi cracks or LPG have actually come down after December in Jan, so which clearly categorically states that oil marketing companies do not bear any LPG burden. I mean can you categorically mention this, sir? Because obviously, our company has also been privatized and the lower the price of the share, the lower the value the government gets. So surprising share prices is not the best alternative for the government to realize maximum value for itself and for its shareholders. So can you please categorically state that oil marketing companies do not bear any LPG burden? And sir, secondly, my question is on the privatization front. I mean this process has gone on well over two years. So can you please help now understand where are we in the stage of privatization because Vedanta has categorically mentioned that they have finished the due diligence. So now can we assume that financial bid stage is approaching and we are on that milestone right now, sir? Thank you, sir.

Vetsa Ramakrishna Gupta — Director of Finance

Yes. Two questions. One is on LPG. You know this LPG, they control the product and the pricing and everything is declared by government of India only, decided by government of India only. And with respect to the budget allocation, lower budget allocation and finally, how it translates to the OMCs. I cannot comment anything since it is a controlled product. The second thing on big investment, big investment like yesterday also, they have indicated it may not happen before March 2022. It may push it to the next financial year. From a company point of view, we don’t have any major significant role in the entire process, only handling. So whatever due diligence, data requirements are there, every quarter, we upgrade the data requirements in the portal and the bidders. They are continuously — they’re accessing the data. And for Q3, during Q3, there is no major event happened in terms of better wages to our company premises and other things. And the status quo is same. But otherwise, we are continuously updating. We are getting some queries and we are applying that process we got.

Sumeet Rohra — Capital PT Limited — Analyst

Okay. And sir, I mean, just on the first question, which you answered. So sir, I mean, it’s also safe to assume that in the Q3 P&L, we have not accounted for any loss of LPG. Is my understanding correct on that?

Unidentified Speaker —

No, there is no loss or gain. I’m saying this pricing is controlled by government of India. What we said on receivables from government of India only add further subsidy scheme, what oil companies are eligible. Only what is eligible only, we have accounted. So other things in terms of pricing and under recovery and LPGs, since control the product, I cannot comment anything on this.

Sumeet Rohra — Capital PT Limited — Analyst

Okay. Okay. Thank you. Thanks.

Operator

The next question is from the line of Manoj Bahety from Carnelian Capital. Please go ahead.

Manoj Bahety — Carnelian Capital — Analyst

Hi, sir. Good morning. Thanks for taking my question. A couple of questions. First one is like if I see over the last one, two months, despite of crude oil prices going up almost by $10, $15, the retail prices are constant. So just wanted to get a flavor that how the marketing margins for especially MS and HSD, are moving in the scenario when like the final retail prices are frozen, not moving in line with crude oil prices. Is there under recovery? Or is there a significant shrinkage in the marketing margins currently because the fuel level retail prices are not changing?

Vetsa Ramakrishna Gupta — Director of Finance

Manoj, earlier also, we have clarified on this. When we have to study the marketing margins, we have to take a look at it on a longer-term perspective. Maybe there may be certain periods where the marketing margins are lower than our standards. And there are periods where definitely the marketing margins are higher than what is the standard margin. But overall, what we look at is, overall, maybe on a yearly basis or a multiple yearly basis, we generally keep comfortable margins, what we are eligible and what we are supposed to get.

Manoj Bahety — Carnelian Capital — Analyst

Okay. And sir, what are those normalized margins? [Technical Issues] it is like in a comfortable positive zone, right?

Vetsa Ramakrishna Gupta — Director of Finance

Yes. Right, right.

Manoj Bahety — Carnelian Capital — Analyst

Secondly, sir, just the extension to the question by previous participant. Just wanted to get a color. Is — I understand that LPG is a controlled product. But we saw this international prices. Are we having a significant lower realization overall in LPG considering the current recent high prices of LPG, especially in the subsidy scheme?

Vetsa Ramakrishna Gupta — Director of Finance

You know we are not increasing the RSP and it’s a controlled product. Beyond that, I cannot comment anything.

Manoj Bahety — Carnelian Capital — Analyst

Okay. But sir, your relation is RSP plus subsidy from the government. So RSP plus subsidy minus the international [Technical Issues].

Vetsa Ramakrishna Gupta — Director of Finance

…eligible, as for the subsidy scheme, we account it. What is not eligible, we cannot account it. And beyond that, we cannot comment.

Manoj Bahety — Carnelian Capital — Analyst

Sure, sir. Thank you. Thank you so much for taking my question.

Operator

Thank you. The next question is from the line of Sabri Hazarika, Individual Investor. Please go ahead.

Sabri Hazarika — Individual Investor — Analyst

I’m from Emkay Global. So I have two questions. The first is related to I mean, HPCL has related to the marketing performance. So HPCL has mentioned that it was inventory not from excise duty cuts, which are responsible for like weaker marketing performance during the quarter. So I just wanted to understand, is it a normal phenomenon because, in the past, we haven’t actually seen this kind of an impact even when in Q1 when excise duty was sharply raised? It was not that the marketing inventory gain went up significantly. So is there any change? Or it is generally unusual formula that whenever —

Vetsa Ramakrishna Gupta — Director of Finance

There is no change — can I reply? Is it over?

Sabri Hazarika — Individual Investor — Analyst

Yeah. Yeah, please, sir.

Vetsa Ramakrishna Gupta — Director of Finance

Yeah. There is no change of calculation because across India, beyond refinery, once the product is moved from the refinery, it becomes a duty paid product. After that, if the duty increases or decreases, the value of the product automatically changes. When you say last year, then there is a duty increase, definitely the values of inventory will go up. But it may be partially offset with the crude price downfall. That may be the reason last year it may be reflected. At a constant prices for example, if the reason is actually duty increase or decrease, finally, it will reflect on the positive side or negative side in terms of the inventory value mainly on the trading range during a particular period.

Sabri Hazarika — Individual Investor — Analyst

Okay. So that was one time. So unless there’s a further excise duty cut, it wouldn’t be there, right?

Vetsa Ramakrishna Gupta — Director of Finance

We don’t know. We don’t know. We cannot comment on the government policy.

Sabri Hazarika — Individual Investor — Analyst

No, if there is no excise duty cut, then there won’t be…

Vetsa Ramakrishna Gupta — Director of Finance

Definitely, Definitely, it’s a normal product movement of prices. Whatever international prices is there in a moment, only to the recent, there may be some trading gains or losses during the.

Sabri Hazarika — Individual Investor — Analyst

And secondly, a credit duty is something which is originally paid by refineries because excise duty is part of the manufacturing process. But is there any counter impact of the same on refining margins during the quarter?

Vetsa Ramakrishna Gupta — Director of Finance

No. Excise duty, if there is any change in the excise duty, it will not impact any refining sale margin.

Sabri Hazarika — Individual Investor — Analyst

Yeah, because your GRMs have been like close to $10 in Q3. So I’m just trying to know…

Vetsa Ramakrishna Gupta — Director of Finance

No. I already explained because during this quarter, the MS and HSD cracks both have improved significantly because the product demand have increased, whereas the supply of the refineries run up to the pre-COVID level capacities.

Sabri Hazarika — Individual Investor — Analyst

Okay. So it was predominantly the core business on which drove the GRM, right? Okay. And second, I’ve got two small questions. Firstly, what was the BORL profitability for Q3?

Unidentified Speaker —

BORL profit for Q3 was INR369 crores.

Sabri Hazarika — Individual Investor — Analyst

INR369 crore. And GRMs would be?

Unidentified Speaker —

$9.8.

Vetsa Ramakrishna Gupta — Director of Finance

$9.8 per barrel.

Sabri Hazarika — Individual Investor — Analyst

$9.8, okay. And lastly, on the LPG front only, I mean, we understand about the subsidized part. But was there any impact on the nonsubsidized LPG margins during the quarter? Because there’s a sharp rise in global prices, but the recent prices have not increased significantly. Even for the nonsubsidized component, it didn’t go up commensurately. So was there any impact on the nonsubsidized marketing margins during the quarter?

Vetsa Ramakrishna Gupta — Director of Finance

I already clarified on LPG. Beyond that, we cannot comment anything.

Sabri Hazarika — Individual Investor — Analyst

Okay. Thank you so much and all the best.

Operator

The next question is from the line of S. Ramesh from Nirmal Bang. Please go ahead.

S. Ramesh — Nirmal Bang — Analyst

Good morning, and thank you very much. Hope all of you are keeping well. So my first question is on the notes under emphasis of matter where there is a comment made by the auditor on the capital gains and the goodwill treatment as a result of your transaction to take over BORL. Sir, how do we understand this?

Vetsa Ramakrishna Gupta — Director of Finance

To clarify that, we have acquired additional stake and we have taken the controlling stake in BORL in Q2. As an accounting standard, for example, if we are taking any controlling stake, we have to carry out the fair valuation of the assets. So within one year period, we have to complete the entire fair valuation of all type of assets, all categories. So in Q2, actually, we have done a provisional valuation for certain category, as I said. So whatever the fair valuation and what is the — our investments, earlier investments you have made, the differential we have to recognize as a goodwill in the books of accounts. So Q3, we have not done anything, but we continue to have Q2 impact.

S. Ramesh — Nirmal Bang — Analyst

So there is no implication in terms of any provision required in your account, right? Just a matter of operations.

Vetsa Ramakrishna Gupta — Director of Finance

No, nothing. Because as an accounting standard, once the final valuation — fair valuation is complete, then we have to reallocate the entire value to various assets. If there is any surplus or deficit, then either goodwill or capital we’ll have to create.

S. Ramesh — Nirmal Bang — Analyst

Okay. So the next order is can you give us some indication in terms of what is the potential revenue and EBITDA you can expect from the petrochemical business in Kochi once — now that all the units are commissioned?

Vetsa Ramakrishna Gupta — Director of Finance

We cannot give any guidance in terms of the revenue from operation because it all depends on the pricing of petrochemicals. When you see, you can witness in the last quarter, actually, the prices of petrochemicals have significantly that come down. So we cannot give any revenue guidance. But broadly, what we can explain, today, we can say all three units have been very well integrated and commissioned. In fact, the last week of January, some of the units, we have reached an operating capability of around 70% to 80%. Whereas in the earlier quarter, it was only 15% to 20%. So now successfully around seven to 10 days, we have come out all the technical problems and we could run the — ramp up the capacity and it is running the units around 70% to 80% levels. So definitely, it should improve the refining capacity utilization as alike PDPP capacity utilization.

S. Ramesh — Nirmal Bang — Analyst

So the petrochemical business is now in commercial operation from fourth quarter.

Vetsa Ramakrishna Gupta — Director of Finance

Yes, yes.

S. Ramesh — Nirmal Bang — Analyst

Okay. Sir, my last thought, in terms of your outlook for BORL, what is the kind of expectations you have in terms of the capacity utilization and the profitability of BORL for next year?

Vetsa Ramakrishna Gupta — Director of Finance

Only present capacity is 7.8 to — MMT. So if the crude — if the product demands continue at this level and we are — the diesel growth comes to the positive side, definitely, we will be in a position to take the capacity utilization more than 100% level, except shutdowns. If there is any shutdowns planned in the next year, there may be a small cut in the refinery throughput. Otherwise, we are at pre-COVID levels, and we can utilize the maximum capacity.

Unidentified Speaker —

In Q3, it was over 100%.

Unidentified Speaker —

Yes. Yes, BORL.

S. Ramesh — Nirmal Bang — Analyst

Okay. And can you quickly give us the nine month profits for BORL?

Vetsa Ramakrishna Gupta — Director of Finance

Nine months, it’s around INR five and INR seven crores.

S. Ramesh — Nirmal Bang — Analyst

INR five crores and INR seven crores. Okay. Thank you very much. I will join the queue.

Operator

Thank you. The next question is from the line of Kirtan Mehta from BOB Capital. Please go ahead.

Kirtan Mehta — BOB Capital — Analyst

Thank you, sir for giving this opportunity. One question in terms of the capex…

Operator

Sorry to interrupt, sir. Mr. Mehta, there is a lot of echo coming from your connection. Yes, now it is clear. Mr. Mehta, you can go ahead. We request you to join the queue back as there is no response. We will move to the next question, which is from the line of Nitin from YES Securities.

Nitin — YES Securities — Analyst

Good morning, sir. Thanks for the opportunity. My question is related to your capex plan. So you mentioned that you have canceled polyols project, and you would be focusing now on polypropylene project. So why was the polyols project canceled? And why you now the focus on polypropylene? And secondly, what is the capacity that you’re looking at in terms of polypropylene production? What is the estimated capex in that project that’s there? And related to that, sir, why are you not considering a phenol project? Apparently, phenol is undersupply in the country, and it’s largely, I mean, imported. And you have all the requisite raw materials in terms of benzene and propylene in your own — as your own refinery product. So why a phenol production was not considered? So that’s my first question.

Vetsa Ramakrishna Gupta — Director of Finance

Yeah. First question for polyol projects, this project was approved in 2018 by the Board at an estimated project cost of around INR9,200 crores with a basic estimation plus or minus 20% because, at that point of time, there was no BDP and license selection. So we can come to a closure cost estimations only after selection of licensor and once we have the BDP package. So in the last couple of years, actually, these licenses selection have been completed and this BDFP package completed. Now the revised cost has increased from INR9,000 crores level to around INR13,000 crores plus or minus 10% level. So one is that reason, the project costs have significantly improved. Based on that, the project economics have significantly changed. The second thing of this polyols, definitely is a niche petrochemicals, based on our lending curve in PDPP, in fact, technically, we have taken a longer period for stabilization, and we have faced many technical problems when we have commissioned this PDPP project. So now we are okay with the PDPP project. But taking the niche petrochemical products with a high complexity, when the costs are very high, when definitely the project economics and IRRs are not lucrative based on the current trend, we decided not to go for complex projects under niche petrochemicals. And in its entirety, polypropylene is the better technology available, and we are doing already, in various other refineries, we are exploring the similar projects. So we have decided with a lesser project cost, and it gives us some more operating efficiencies in terms of project funding. That was the reason we have selected a polypropylene to explore further.

Nitin — YES Securities — Analyst

Understood, sir. So your estimates for this the capex in polypropylene and what is the expected time line capacity that you have planned?

Vetsa Ramakrishna Gupta — Director of Finance

No. We have to take a detailed feasibility study reports. Just now we have approved for carrying out this DFR and exploring. Maybe after some point, we will get a clarity what capacities. And our objective is, today, at Kochi is around 450 tonne per annum — TMT per annum of propylene, we have to utilize for value addition. So with that background, whatever capacity is suitable in economies of scale, we will decide.

Nitin — YES Securities — Analyst

So that was 400,000 tonnes you mentioned? Propylene that…

Vetsa Ramakrishna Gupta — Director of Finance

450 TMT propylene availability.

Nitin — YES Securities — Analyst

Understood, sir. And sir, the question around phenol. So why are you not considering phenol because that’s an undersupply in the country and is imported?

Vetsa Ramakrishna Gupta — Director of Finance

We have to study whether can we integrate phenol manufacturing facility with polypropylene availability. Today, why we are doing polypropylene is mainly availability of propylene and what is the valuation we can do. I’m not sure whether phenol can be taken up or not. We have not studied.

Nitin — YES Securities — Analyst

Understood, sir. And sir, my second question would be, so given that there’s a privatization process on, so if a new management comes in, what are the chances that these projects would continue as planned and it wouldn’t be like reconsidered by the new management, which are coming in? So how does that work out?

Vetsa Ramakrishna Gupta — Director of Finance

Our view, definitely, these projects adds value to the organization. For the growth of the organization, when commercially viable projects are picking up, I don’t think any new management comes so they will take any second view on these projects. When it is good for the refinery, tomorrow, for example, any transition happens, if there is any shortfall of the demand of the new products, so there is actually some capacity we can take it for value integration. And commercially, these products are viable. So I don’t think any new management will take a different call on these projects. And beyond that, we cannot comment what is the view on what is the business thought process of the new management.

Nitin — YES Securities — Analyst

Understood, sir. Thank you, so much for answering my question, sir. That would be all.

Operator

Thank you. The next question is from the line of Vishnu Kumar from Spark Capital. Please go ahead.

Vishnu Kumar — Spark Capital — Analyst

Good morning, sir. Wanted to understand the PDPP profit or gain at an EBITDA level for the first nine months in this quarter, if you could give that number.

Vetsa Ramakrishna Gupta — Director of Finance

Actually, there is no relevance for this number because this plant is operating at a 15% to 20% level. The contribution is very insignificant. In case, if you ask me, the contribution is negative except for Q3. So it is not relevant for Q — up to April to December. It is another stabilization period when plants are operating at a 20%, 15% level. Whatever number I give, there is no relevance. So definitely Q4, we expect at least good operating capacities we will read, then we can share.

Vishnu Kumar — Spark Capital — Analyst

No. The question is that is it like our — is it running into hundreds of crores or it will be much less on an EBITDA level?

Unidentified Speaker —

Much less.

Vetsa Ramakrishna Gupta — Director of Finance

Much less. It will be around 50 to 100 as I just said.

Vishnu Kumar — Spark Capital — Analyst

Got it. So going forward, when you report this number, it will be part of your GRM. Is that right to understand?

Unidentified Speaker —

Yes.

Vetsa Ramakrishna Gupta — Director of Finance

Yes.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. Second would be in terms of the Saudi crude discounts that you are getting. Versus last quarter, the number has steeply gone up to about — I mean, I think last quarter was about $0.50 or so for heavy crudes. Now it is almost close to $2. Would this negatively impact the GRMs? Or — just wanted to understand, on the crude sourcing side, how are you seeing things? I understand the cracks are improving but on the sourcing side, if you could just give us some thoughts?

Unidentified Speaker —

So on the crude sourcing side, if you see Q3, actually, it’s a premium around $1. And if you see some countries, which we are sourcing around 25% in Saudi Arabia, a similar percentage, 27% is from U.S., then we have from Iraq. These are the countries with significant sourcing of crude, which we take.

Vishnu Kumar — Spark Capital — Analyst

Okay. Are you seeing some — I mean the cost going up on the side? That is the question.

Vetsa Ramakrishna Gupta — Director of Finance

No. Generally, Saudi OSP, they declare a month-to-month basis. What are the months they declare the OSP as either premium or discount in line with the market trends, whether Brent Dubai market trends, basically, declare. But Q3, they declared the OSP premium much beyond the market trends around $1, $1.5. But during the latter stage, they have charactered that.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. And the last question would be that what was the inventory — closing inventory price of the stock that we are carrying or Brent? Would it be $79, $80 or what price levels?

Unidentified Speaker —

Around $78…

Vetsa Ramakrishna Gupta — Director of Finance

Around $78 of crude inventory valuation.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. Sir, one final suggestion from me. Earlier, a couple of years ago, you used to give the inventory gain separately and inventory loss. In between, you guys had — I mean across all OMCs, you have taken a call not to give that number. But honest suggestion is that, as analysts, it would always be easier for us to work with the core GRM and not taking the inventory gains separately. This kind of reporting actually does not really help the analysts to project the numbers because the quarterly variations are quite wide. So I sincerely urge that maybe, again, you can possibly think to add or give separately the inventory gain or loss on the refining side again. This is just a suggestion at the moment.

Vetsa Ramakrishna Gupta — Director of Finance

But one thing and let me clarify to help the analysts, only we have, again, started giving the marketing share trading in losses. But refine to said earlier also, we have clarified — because my average inventory carrying is only seven days to 10 days, okay. And my monthly procurement is a monthly average basis. So logically, I should not calculate anything on account of inventory gains or losses in terms of refinery performance. Only in certain periods of time, for example, any world batches, still it is there in the inventory. If the actual consumption even happening on Q4 basis, yes, there may be some gains or losses. But otherwise, logically, if we see when our inventory holding is 10 days to 11 days, when my monthly procurement cash be monthly average, so one should not calculate any core GRM. That is our understanding. That was the reason we have stopped.

Vishnu Kumar — Spark Capital — Analyst

I’m sure that this time around your GRM monthly is $3 to $4 should be inventory gains. So that’s from a competition point…

Vetsa Ramakrishna Gupta — Director of Finance

I’m saying we are calculating because there is no scientific methodology of calculating because logically in operations, when a physical movement should happen on a Q4 basis, sometimes, the physical movement may not happen on Q4 basis, some old code can continue in the inventory. So definitely on quarter-on-quarter basis, this way or that way, it can happen. But if we see logically, when inventory carrying days are only 11 days or 10 days, my monthly procurement cost — monthly average, I don’t think we have to calculate for GRM separately because BPCL, we don’t have any very large pipeline capacities. We have only quarter locations, and that is the reason our inventory carrying is only 10 to 11 days.

Vishnu Kumar — Spark Capital — Analyst

Got it, sir. Just — so as I have said because other OMCs were giving this number earlier, hence, I just thought it would apply here it also. Anyways, thanks a lot sir.

Operator

Thank you. The next question is from the line of Saurabh Handa from Citigroup. Please go ahead.

Saurabh Handa — Citigroup — Analyst

Yes. Thank you for the opportunity. Sir, this was a question again on this additional excise on blended fuels. I wanted to understand it more from a diesel perspective because, petrol, we understand is blended in large parts of the country. But on diesel, my understanding is there’s not too much of blending happening right now. And if that is the case over the next nine months, then in October, does this mean that, in large parts of the country, there will be INR two excise on the price of diesel? Or is there any risk that you might have to absorb some of this?

Unidentified Speaker —

We can give only the facts, which are there. So as you rightly said, yes, the blending of diesel with biodiesel is very minuscule. And going forward, so announcement has been made. We would have to see how things progress.

Saurabh Handa — Citigroup — Analyst

No, I mean, so can you provide any further color? Like how will this work if the situation going to be like this in October as well?

Vetsa Ramakrishna Gupta — Director of Finance

At this point of time, we don’t have any — what is the methodology, how do we implement, for example, if they say from 1st October, there is a differential tariff of INR2, we have to study and then only we can come to our conclusion, okay, this should be the impact. Today, as of date, we have only the historicals, what is the blending and other thing. But after October, how it happens, we have to study and then only we can comment on this.

Saurabh Handa — Citigroup — Analyst

Okay. And is there a possibility that you have to bear this additional burden? I mean is there a risk? Or would it be a pass-through?

Vetsa Ramakrishna Gupta — Director of Finance

No clarity on this one. As of date, no clarity.

Saurabh Handa — Citigroup — Analyst

Okay. And just factually, do we know how much of blending is happening in diesel right now? Or how much is not…

Unidentified Speaker —

It is less than 1%.

Vetsa Ramakrishna Gupta — Director of Finance

It is less than 1% for diesel presently.

Saurabh Handa — Citigroup — Analyst

Okay. And — so basically, it’s hardly happening anywhere.

Unidentified Speaker —

Yes.

Saurabh Handa — Citigroup — Analyst

Okay. That was it from me. Thank you.

Operator

Thank you. The next question is from the line of Pinakin from JPMorgan. Please go ahead.

Pinakin — JPMorgan — Analyst

Thank you. Sir, you mentioned about setting up 1,200 EV pumps, EV stations in this year. So sir, can you just walk us through the economics of this entire foray in terms of what is the capex for the 1,200 stations or for one station? How is profitability going to be measured? What is the kind of payback that you expect? Because if you’re going to roll it out this year, you would have — basically have those details already with you.

Vetsa Ramakrishna Gupta — Director of Finance

Yes. We are planning 1,200 EV stations for the calendar year, maybe a limited number before 31st of March, but maximum EV conversion happens only after March only. But in terms of capex, I think the rough calculation we are expecting, maybe INR five lakh to INR12 lakh per our station. It depends on whether two-wheeler EV charging station or 4-wheeler charging station and what type of capacity we have to take. But otherwise, if you talk about the overall capex, I don’t think very big capex or 1,200 into INR10 lakh, it’s only INR120 crores in terms of capex investments. In terms of profitability and other things, we are not sure whether what level of charging happens at the retail outlet. We are to study on the business model what revenues and other things it comes. But otherwise, the capex side is around INR120 crores for this 1,200 retail outlets.

Pinakin — JPMorgan — Analyst

Sure, sir. So just trying to dig more. Now as this picks up further, would this — and do you see this cannibalizing the gas charging that you’re doing at your outlets? Or do you see those two growing separately? Or will it cannibalize the petrol and diesel? So basically, how do you see these stations being rolled out in terms of which one do you think it eats up more?

Vetsa Ramakrishna Gupta — Director of Finance

We don’t have any clear idea, but at least per our aspiration, we want to convert maximum of our retail outlets to energy stations. So these stations can power all types of energy, it’s either MS or HSD or CNGR, electric vehicles. But in the coming years, which one will impact which one, no clarity because once the vehicles should come into place, then only we can comment what percentage of vehicles — EV vehicles will come into the market, then we can comment on what would be the impact on this.

Pinakin — JPMorgan — Analyst

Sure, sir. So just to clarify, the profitability will only be known later when you have the throughput in terms of the vehicles coming in and charging, and then only we’ll have a more clearer idea.

Vetsa Ramakrishna Gupta — Director of Finance

Yes, more clarity, right.

Pinakin — JPMorgan — Analyst

Understood. Thank you, sir.

Operator

Thank you. The next question is from the line of Mayank from Morgan Stanley.

Mayank — Morgan Stanley — Analyst

Yes. Thank you for the call sir. Just two questions. One was on the capex side. Can you just help us on the outlook for capex for this year and fiscal 2023 and fiscal 20’24 and how much of that is going towards the new fuels as well as the petrochemical side going forward in terms of overall capex that you’ll be spending for the next two years?

Piyush Borania — Senior Manager of Pricing and Insurance

So for fiscal 2023, the numbers for refinery is around INR1,300 crores, for pet chem some INR2,600 crores. Marketing side is some INR2,300 crores. Equity investments in the JV subsidiary is around INR1,800 crores. And the other projects is some INR2,000 crores. So total capex coming to some INR10,000 crores. And a similar figure we are also seeing for financial year 2024.

Mayank — Morgan Stanley — Analyst

Okay. And in terms of the breakup, would you know how much is kind of going into the existing business and the new business that you’re trying to develop across chemicals and other things, alternative fuels? Would you have a rough clue?

Vetsa Ramakrishna Gupta — Director of Finance

Roughly, if you see for the next couple of years our capex plan, the major chunk will go to petrochemicals provided if the DFR is completed. And if we come up with a viable project, maybe mid of 2022, 2023, we’ll come to know what is the size and what is the configuration. If the project what we are initiating is commercially viable, definitely, the project cost will be around INR30,000 crores plus at Bina refinery. And the second one is for the existing business, if you export CGD, we are treating CGD a new business, so CGD will be around — 20%, 25% of our total capex, it will go for CGD. And the petrochemicals, if this project comes, significant portion will go to the petrochemicals. And normal continuation of existing retail outlet, network expansion and refinery and other insulation, it will be around 20%, 25% broadly.

Mayank — Morgan Stanley — Analyst

Got it, sir. And I think the second question was more related to, I think, on the BORL side. Sir, have you started putting in, in terms of your volume numbers, including BORL now because I thought it’s not including BORL in the overall throughput, I thought?

Vetsa Ramakrishna Gupta — Director of Finance

No, no, in consolidated, you will find BORL included because it becomes 100% subsidiary. But standalone business, definitely, since the must happened or standalone, we are not including BORL. In the handout, it is not there. Maybe next time, we can include consolidated numbers throughput.

Mayank — Morgan Stanley — Analyst

Got it. Okay. Sir, thanks for that clarification. And the last question was more related to your, I think, announcement around what you are doing with BARC. So can you just give us an idea of what the plan is and how are you kind of thinking around that on electrolyzers?

Piyush Borania — Senior Manager of Pricing and Insurance

So we have entered into an MOU with BARC, and that is towards the development of technology for electrolyzers.

Mayank — Morgan Stanley — Analyst

Correct. So like are you going to manufacture it yourself and use it yourself? Or are you looking at — to kind of even — kind of once this technology evolve, you want to kind of export it out or sell it outside BPCL? What is the planning around any of it?

Unidentified Speaker —

It’s too premature to comment now. We have just entered into the agreement, so we will see how it evolves.

Mayank — Morgan Stanley — Analyst

Okay. Fine. Thank you.

Operator

Thank you. The next question is from the line of Rajiv Agarwal from Sterling Capital. Please go ahead.

Rajiv Agarwal — Sterling Capital — Analyst

So just thanks for giving the opportunity. One question I have is this, in consolidated statement, you have share of profit and loss from equity accounted investees. So it has — in the last nine months, it has come from loss to profit. So can you give me the break up from which joint ventures these profits are coming roughly?

Vetsa Ramakrishna Gupta — Director of Finance

Yes. Last year, nine months period, BORL was a joint venture, that whether whatever losses of BORL, it has been accounted as share of profit from the investee — accounted investee. That is one reason. Second one, we have certain JVs in exploration side. There, whatever relinquishment or whatever losses happened, last year, that was accounted in nine months period. So this year, BORL becomes a subsidiary, line in consolidation.

Unidentified Speaker —

[Indecipherable]

Vetsa Ramakrishna Gupta — Director of Finance

And current year, all the gas companies, the performance is good, the JV companies.

Rajiv Agarwal — Sterling Capital — Analyst

Okay. So now BORL is not included in this.

Vetsa Ramakrishna Gupta — Director of Finance

For this period, it is not there because it becomes subsidiary from second quarter of this year.

Rajiv Agarwal — Sterling Capital — Analyst

Okay. Okay. Okay. Got it. So this INR1,187 crores is from — entirely from gas subsidiary.

Vetsa Ramakrishna Gupta — Director of Finance

INR1,187 crores — yes, yes.

Rajiv Agarwal — Sterling Capital — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Avadhoot Sabnis from InCred Capital. Please go ahead.

Avadhoot Sabnis — InCred Capital — Analyst

Am I audible?

Operator

Yes, sir.

Vetsa Ramakrishna Gupta — Director of Finance

Yes.

Avadhoot Sabnis — InCred Capital — Analyst

The first question was on the consolidated accounts on Mozambique. Our understanding is that because the project is in the development stage, you were capitalizing all costs relating to Mozambique. So in that framework, can you just explain a bit as to why you needed to put anything — expense out this, whatever we have done in the third quarter even if it’s taken as an exception?

Vetsa Ramakrishna Gupta — Director of Finance

Because this project has been declared under force majeure and under suspension period, but for accounting standard and the suspension period, some of the expenses, we cannot take it as a capital item because it will not add any value to the asset. So during suspension period, some of the expenses we cannot capitalize.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. And then what is this interest then — anyway you have been capitalizing, right, whether it is suspended or not suspended earlier prior to all these years have been…

Vetsa Ramakrishna Gupta — Director of Finance

Other than suspension period. For example, any project under suspension period, generally, some of the cost components we cannot capitalize.

Avadhoot Sabnis — InCred Capital — Analyst

So the entire interest on loans on Mozambique during the suspension period is what you have written off, was it?

Vetsa Ramakrishna Gupta — Director of Finance

Right, right. Right.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. And as soon as the suspension period is over, you’ll continue to now capitalize going forward.

Vetsa Ramakrishna Gupta — Director of Finance

Now, for example, if the project will come back, so then the normal accounting process will continue.

Avadhoot Sabnis — InCred Capital — Analyst

Which is true from fourth quarter, right?

Vetsa Ramakrishna Gupta — Director of Finance

What we are expecting, hopefully, there are some good things that are happening at [Indecipherable].

Avadhoot Sabnis — InCred Capital — Analyst

If it remains under suspension, you’ll continue to — you have to charge it to P&L, is it, all the interest costs?

Vetsa Ramakrishna Gupta — Director of Finance

Yes.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. But as project costs anyway, I presume there will be nothing more.

Vetsa Ramakrishna Gupta — Director of Finance

As of date, there is no relevant on the project.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. Second question was on pet chem. You mentioned that speciality pet chems has been a challenge. If I recollect correctly, the earlier proposal on speciality chemicals was to bring in — was to do it in a JV with a specialized partner, and that got aborted at some stage. Are you not — is it not possible to revisit that at all, find again — do it with JV partners?

Vetsa Ramakrishna Gupta — Director of Finance

As of date, two reasons why polyol we have discontinued. One is on project cost. Second one is technology, right, you said. Today, PDPP, after a long struggle, 3, four quarters how much we have struggle to come back to the stabilization. So with this lending curve, we are expecting this type of complex projects cannot have 100% refining utilization — project utilization. So when these type of projects 100% doesn’t happen, definitely, we need a strong technology partner, then only these projects can be available. That is what our understanding in terms of niche petrochemicals. So as of date, we don’t have any JV partner. Maybe in future, for example, if anything comes, so still we can explore. But by the time, in case of polypropylene, project can utilize the entire water propylene availability at refinery, so that my refined output also properly we can utilize.

Avadhoot Sabnis — InCred Capital — Analyst

Next question, sir, the stand-alone debt is INR8,038 crores, as I said, additional on the lease liability. Could you share the corresponding number on a consolidated basis, if it’s possible?

Vetsa Ramakrishna Gupta — Director of Finance

That number, we don’t know, but otherwise, more or less same only. Other group companies, they don’t have any major leases.

Avadhoot Sabnis — InCred Capital — Analyst

No, no, the proper debt. I’m thinking BORL and BPRL will have debt, right?

Vetsa Ramakrishna Gupta — Director of Finance

No. Debt is there. You want that portion or lease…?

Avadhoot Sabnis — InCred Capital — Analyst

I wanted the debt. INR8,038 crores is the figure — corresponding figures for consolidated.

Vetsa Ramakrishna Gupta — Director of Finance

I agree. INR8,038 crores is only lease obligations.

Avadhoot Sabnis — InCred Capital — Analyst

I’m sorry, I’m sorry, I’m sorry, sorry, sorry. So whatever is the debt number, sorry, which is what…

Vetsa Ramakrishna Gupta — Director of Finance

Our debt number, unconsolidated number.

Piyush Borania — Senior Manager of Pricing and Insurance

Sir, for BORL, again, INR53,000 crores.

Vetsa Ramakrishna Gupta — Director of Finance

Consol basis, the debt levels are INR53,000 crores.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. And on the blending portion, I realize you may not have gone through the fine print, but on the whole blending issue from October, I presume the government doesn’t prescribe the blending level, right? So basically, whether the blending level is 7% or 0.5%, even if it’s 0.5%, the lower excise would apply, right?

Vetsa Ramakrishna Gupta — Director of Finance

Actually, whatever actually notified, it was not clear at what blending levels. Maybe we have to wait and see what is the fine print and what notification comes.

Avadhoot Sabnis — InCred Capital — Analyst

Okay. Okay. And lastly, sir, and — whatever, this is not a question. This is just an observation. I mean I heard what you said. The inventory gains are not material because you hold very little inventory. But as for your own figures, out of $4.06 of GRM reported in FY ’21, $2.1 was inventory. Thank you so much.

Operator

Thank you. The next question is from the line of Kirtan Mehta from BOB Cap.

Kirtan Mehta — BOB Cap — Analyst

Thank you sir for giving me this opportunity. In terms of the privatization, would you be able to elaborate on the steps, those are remaining before government can invite financial bids? That is the first question.

Vetsa Ramakrishna Gupta — Director of Finance

No. Other steps, definitely, government have to declare the real price and the — [Indecipherable] advisor to calculate and the SPL to be finalized. There are some milestones they have to achieve before calling for the financial bids. But the entire process is being carried out by DIPAM only. So from our side, only whatever data quarterly basis, we have to provide the data and we have to reply for the [Indecipherable].

Kirtan Mehta — BOB Cap — Analyst

Just a sort of a follow-up, when you say there are certain milestones to be achieved, what would that entail?

Vetsa Ramakrishna Gupta — Director of Finance

First, one thing I’m saying we are not involving in the process. So I don’t have any milestones and dates, either the transaction adviser or DIPAM only can have the milestones for this.

Kirtan Mehta — BOB Cap — Analyst

Sure, sir. And in terms of sort of the PDPP project, once we reach the sort of the optimum utilization level of 75% to 80% that we can sustain through Q4, would your earlier guidance of sort of it adds around $1 per barrel to the refining margin, does that still hold true? Or do you think that, that would change depending on the environment?

Vetsa Ramakrishna Gupta — Director of Finance

We are hopeful at getting recent price trend. The crude prices have gone up, whereas petrochemicals prices have come down. But longer term, this contraction should not happen. But overall, we are expecting whatever guidance, whatever we expect, that should continue, that should continue, provided refining — project capacity utilization can get 70% to 80% level.

Kirtan Mehta — BOB Cap — Analyst

Great, sir. And one more question, if I may add. In terms of the LPG, you declared these receivables number from government at INR196 crores. Would you be able to sort of share the number of eligible subsidy and — for the Q3 quarter that you have calculated as of now?

Vetsa Ramakrishna Gupta — Director of Finance

I don’t have exact number, letter we can submit how many number of people are eligible for the subsidy.

Kirtan Mehta — BOB Cap — Analyst

Sure, sir. Thank you.

Operator

Thank you. In interest of time, this was the last question for today. I would now like to hand the conference over to management for closing comments.

Piyush Borania — Senior Manager of Pricing and Insurance

On behalf of BPCL team, I thank all the investors for taking part in the conference call. Also, I thank Antique Stockbroking Limited for organizing this call. We look forward to meeting after the next quarterly results. Thank you, everyone.

Operator

[Operator Closing Remarks]