Indian Oil Corp. (IOCL) cut gasoline prices for the first time since June after the rupee appreciated, giving Prime Minister Manmohan Singh relief from criticism for raising diesel prices last month.
The price will be decreased by 0.56 rupees a liter ($0.1) in New Delhi starting today, Indian Oil, the nation’s biggest refiner, said in an e-mailed statement. Rivals Hindustan Petroleum Corp. (HPCL) and Bharat Petroleum Corp. (BPCL) usually follow Indian Oil’s action. Gasoline will cost 67.90 rupees in the capital New Delhi, according to Indian Oil’s website.
A 14 percent increase in diesel prices was the first of a number of measures Singh announced to narrow a budget deficit, attract overseas investors and revive an economy that’s growing at close to the slowest pace in three years. The steps have been opposed by political parties and resulted in an ally of the government’s ruling coalition withdrawing support. Singh promised to unveil more policy changes.
A decline in Brent crude oil prices since Sept. 14, when the government raised diesel prices, and a 3.2 percent gain in the rupee allowed Indian Oil to cut gasoline prices. The company continues to lose money on diesel, kerosene and cooking gas sales, according to the statement.
Indian Oil shares rose 0.4 percent to 260.05 rupees in Mumbai yesterday before the announcement, compared with a 1.2 percent fall in the benchmark Sensitive Index. (SENSEX) Bharat Petroleum lost 0.3 percent and Hindustan Petroleum fell 0.5 percent.
The three state-owned companies may lose 1.6 trillion rupees in the year ending March 31 from selling diesel, kerosene and cooking gas below cost, according to the statement.
The government reduced excise duty on gasoline by 5.30 rupees a liter on Sept. 14 to reduce refiners’ losses. The benefit wasn’t passed on to customers. The price of diesel was raised to 46.95 rupees a liter in New Delhi and the number of subsidized cooking gas bottles was limited to six a year for each family.
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