NEW DELHI: Indian state refiners reported large losses on inventory for the third quarter, hit by the rapid decline in global oil prices, though some were helped by swift payment of government subsidies to compensate for its regulation of retail fuel prices.

Indian Oil Corp Ltd., the country's largest refiner, was hit hardest and on Friday reported a net loss of Rs.26.37 billion ($425 million) in the three months to Dec. 31, against a loss of Rs.9.61 billion a year earlier.

Its loss on inventory, referring to the price impact in the time it takes to process crude and market the refined product, was Rs.128.42 billion ($2.07 billion) compared with a gain of Rs.6.53 billion a year earlier, Chairman B. Ashok told reporters.

Brent crude dived to less than $60 a barrel in December from a peak above $115 last June.

However, the government's swift payments to cover enforced low retail fuel prices offset losses on inventory for two junior refiners, officials said. Such payments are usually made months in arrears.

Despite the higher inventory hit and squeezed profit margins, Hindustan Petroleum Corp. reported a narrower net loss of Rs.3.25 billion, while Bharat Petroleum Corp. managed to post a profit of Rs.5.51 billion.

The three companies together lost Rs.159.81 billion in the quarter because of the price cap on retail fuel sales, against Rs.397.25 billion a year earlier, Reuters reported on Thursday.

The drop in those losses was because the government ended controls on pricing for diesel, which makes up about 40 percent of the country's demand for refined fuel.

"We have managed to post profit because of timely release of subsidy, operational efficiencies and optimisation of cost despite high inventory losses," said BK Datta, head of refineries at BPCL.