Hindustan Petroleum Corporation Ltd (HPCL) will stop buying diesel from companies like Reliance Industries Ltd and Nayara Energy once it completes expansion of its Visakhapatnam refinery in Andhra Pradesh and builds a new one in Rajasthan next financial year, company officials said.

HPCL owns almost a quarter of petrol pumps in the country but does not have commensurate oil refining capacity to produce petrol and diesel. So to make up for this, it buys products from refiners such as Mangalore Refinery and Petrochemicals Ltd (MRPL), Reliance Industries' Jamanagar units in Gujarat and Nayara's Vadinar refinery.

At an investor call post announcing second quarter earnings, HPCL chairman Pushp Kumar Joshi says the firm's focus on capital spending in the last five years in "strengthening quality and capacity" of assets has "started yielding results now".

The company has already expanded its Mumbai refinery capacity to 9.5 million tonnes per annum from 7.5 million tonnes and would complete the expansion of Visakhapatnam unit to 15 million tonnes next year, he said. Besides, it is building a new 9 million tonnes a year oil refinery and petrochemical complex at Barmer in Rajasthan at a cost of Rs 73,000 crore.

Together with capacity addition, the company has forayed into new areas like petrochemicals, natural gas and biofuels business "to provide stability to our balance sheet", he said.

Giving an update on Visakhapatnam refinery expansion project, Joshi said a 3.05 million tonnes full conversion hydrocracker unit (FCHCU) has been commissioned, which will increase distillate yield (production of petrol and diesel).