Indian Oil Corp. (IOCL), the nation’s biggest refiner, cut gasoline rates a week after they were raised to a record, after protests by some political parties and a drop in global crude prices.
The price of the auto fuel will be reduced by 2.02 rupees a liter in Delhi, Indian Oil said in an e-mailed statement. Gasoline currently costs 73.18 rupees a liter. “Prices have been cut because of the softening of global oil prices. Its just the hard numbers,” Indian Oil Chairman R.S. Butola said by telephone today. Hindustan Petroleum Corp. and Bharat Petroleum Corp. (BPCL) usually follow Indian Oil’s action.
Lowering gasoline prices will hurt the finances of Indian Oil, Bharat Petroleum Corp. and Hindustan Petroleum Corp. (HPCL), which are paying more to import crude as the rupee slumped against the dollar. Train and bus services were disrupted and markets shut in parts of India May 31 during a nationwide strike over the increase in gasoline prices.
Indian Oil shares rose 0.2 percent to 256.15 rupees at the close in Mumbai yesterday, compared with a 1.6 percent decline in the benchmark Sensitive Index. (SENSEX) Bharat Petroleum fell 0.5 percent and Hindustan Petroleum climbed 2.3 percent.
Brent crude, a benchmark for almost all of the oil India buys, dropped below $100 a barrel yesterday for the first time since October. Prices have slumped 20 percent this quarter.
Gasoline rates were raised by 11 percent starting May 24, the first increase in almost seven months. Opposition parties, led by the Bharatiya Janata Party, called the strike to protest the move, while the Dravida Munnetra Kazhagam, the government’s second-biggest ally, said the increase caused “bitterness.”
Mamata Banerjee, chief of the Trinamool Congress party, a coalition member, led a protest march through the streets of Kolkata on May 26, demanding a rollback.
Gasoline was freed from government control in June 2010. Prices are reviewed every two weeks and can be adjusted according to global benchmarks.
The refiners sell diesel, kerosene and cooking gas below cost to curb inflation and they expect to lose 1.86 trillion rupees in revenue in the current financial year.
China reduced gasoline and diesel prices on May 10 after crude prices declined. Indian refiners import about 80 percent of their crude requirements and the rupee’s decline has countered lower oil prices.
India’s rupee completed a ninth weekly decline yesterday, the longest losing streak since October 2008. It dropped 6 percent last month, the worst performance among the 11 most- traded Asian currencies tracked by Bloomberg.
The rupee rose 0.9 percent to 55.5850 yesterday, after sliding to an all-time low of 56.5150 May 31.