Mumbai: Indian Oil Corporation Ltd (IOC) the country's biggest refiner, is facing a cash crunch with daily losses from subsidised fuel sales rising to Rs320 crore ($80 million) amidst rising prices of crude oil.

If the situation continues, the refiner may not be able to meet routine expenses  and if this persists for more than a year, its projects may also get derailed, IOC chairman S Behuria said.

"Right now we are able to manage, but if this continues for one more year, we will see investment in our project getting impacted," Behuria said.

IOC also expects to process less crude in the current financial year - around 46.5 million tonnes - as it plans maintenance shutdowns at some of its refineries, its director of finance SV Narasimhan said.

IOC earned $7.7 a barrel from processing crude oil in the three months ended March 31 against $9 a barrel in December, Behuria said. Profit from processing had more than doubled to a ``near record'' $10.43 a barrel in the third quarter from $4.50 a barrel a year earlier.

IOC had also reported a 17 per cent increase in profit at Rs2,090 crore in the three months ended December 31.

Crude oil for May delivery is ruling above $109.50 a barrel in the New York Mercantile Exchange. Prices have risen 72 per cent in the past year.

IOC plans to spend Rs7,500 crore this year on expanding and upgrading refineries in Gujarat, Panipat in the north and Haldia in West Bengal, Behuria said.

The refiner had plans to spend Rs9,000 crore in the two years ended December 2009 to upgrade plants and make cleaner gasoline and diesel, BN Bankapur.

The government has kept retail fuel prices under check, except for a minor hike in February this year, even as oil prices rose 57 per cent last year.

The increase, however, was not enough to ease the strain on the finances of refiners, which get bonds as partial compensation for the losses.

Public sector refiners will get Rs23,460 crore of bonds for the 2007-08 financial year that ended 31 March 2008, against Rs24,120 crore bonds in the previous fiscal.

The bonds aren't enough to compensate refiners and IOC is forced to sell the bonds at a 9-10 per cent discount, Bahuria pointed out.

IOC also had to borrow heavily to meet working capital requirement. Its borrowings are expected to rise to as much as Rs3,000 crore a month, he said, adding IOC's debt as of 31 March stood at Rs34,000 crore.