Indian Oil Corp. (IOCL), the nation’s biggest refiner, increased gasoline prices for the second time in two weeks as a depreciating rupee raised the cost of importing crude oil.
Gasoline will cost 1.4 rupees more a liter, excluding local taxes, starting midnight, the New Delhi-based state-owned company said in an e-mailed statement today. The price will increase 2.4 percent to 70.74 rupees ($1.3) a liter in New Delhi, according to the refiner’s website. Bharat Petroleum Corp. (BPCL), the second-biggest state refiner, and Hindustan Petroleum Corp. (HPCL) typically follow Indian Oil.
Prime Minister Manmohan Singh’s government, seeking to cut the budget deficit to the lowest in four years, allowed state- run refiners to revise fuel prices more frequently to help them reduce losses from sales and increase cash flows. Price of diesel, which is sold below cost, can be increased every month until the shortfall is wiped out.
Indian Oil loses 11.26 rupees on every liter of diesel it sells, according to the statement. The deficit on kerosene is 33.43 rupees a liter and on liquefied petroleum gas used for cooking is 439 rupees on every 14.2-kilogram bottle.
The rupee declined 1.2 percent against the U.S. dollar since Feb. 16, when gasoline prices were previously raised, making it the second-worst performer among major currencies in Asia Pacific. A decline in the rupee’s value means the refiners pay more to import crude oil.
Indian Oil shares gained 2.1 percent to 298.85 rupees at the close in Mumbai, compared with a 0.3 percent increase in the benchmark S&P BSE Sensex (SENSEX) index. Bharat Petroleum rose 3.6 percent and Hindustan Petroleum 4.4 percent.
Brent crude, a benchmark for more than half of the world’s oil, including India, has declined 0.8 percent this year. The April contract traded 1 percent lower at $110.23 a barrel as of 12.46 p.m. on the London-based ICE Futures Europe exchange.
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