Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Indian Refiners Surge After Diesel Price Increase: Mumbai Mover

Receptionists work in an Indian Oil Corp. office in New Delhi. deficits. Indian Oil raised diesel prices by 0.50 rupees a liter in New Delhi effective today, according to the company’s website. Photographer: Brian Sokol/Bloomberg
Receptionists work in an Indian Oil Corp. office in New Delhi. deficits. Indian Oil raised diesel prices by 0.50 rupees a liter in New Delhi effective today, according to the company’s website. Photographer: Brian Sokol/Bloomberg

Jan. 18 (Bloomberg) -- Indian Oil Corp., the nation’s biggest refiner, surged the most in more than two years in Mumbai trading and led an advance in refinery stocks after diesel prices were raised for the first time in four months.

Indian Oil rose 11 percent, the most since Dec. 1, 2010, to 349.30 rupees at the close in Mumbai. Bharat Petroleum Corp. increased 9.8 percent and Hindustan Petroleum Corp. jumped 5.4 percent. The benchmark Sensitive Index climbed 0.4 percent.

Prime Minister Manmohan Singh’s government yesterday allowed state-run refiners to fix diesel prices on their own for the first time in more than a decade, seeking to narrow an expanding subsidy bill and budget deficit. Refiners including Indian Oil are planning monthly increases in prices of the fuel, two people with direct knowledge of the matter said yesterday. State refiners lost 9.6 rupees ($0.18) a liter on sales of diesel before today’s increase.

“It’s one of the best steps the government has taken in recent months and it will have far-reaching impact on the economy,” said Deven Choksey, managing director at Mumbai-based KR Choksey Shares & Securities Pvt. “Increasing fuel prices will clear the path to reducing subsidies, which is one of the main reasons behind our high fiscal and current account deficits.”

Indian Oil raised diesel prices by 0.50 rupees a liter in New Delhi effective today, according to the company’s website. The refiner also said it increased the price of domestic non-subsidized cooking gas by 46.50 rupees a bottle.

Cooking Gas

The government increased the number of subsidized cooking gas bottles per household to nine from six annually, according to the statement. Gasoline price was reduced by 0.25 rupees a liter. Diesel to bulk users, including the railways, will be sold at market rates, increasing prices by 9.25 rupees.

Higher diesel prices will help reduce annual revenue losses on fuel sales at the three state-run refiners by 150 billion rupees, Indian Oil said yesterday. The increased number of subsidized LPG bottles will raise the bill by 100 billion rupees.

The refiners lost 124.85 trillion rupees on below cost fuel sales in the nine months ended Dec. 31, according to oil ministry data. This includes 738.2 billion rupees on diesel.

The refiners sell diesel, cooking gas and kerosene at fixed prices. They are partly compensated by cash payments from the government and discounts on crude oil by state explorers including Oil and Natural Gas Corp. and Oil India Ltd. Gasoline is deregulated.

Explorers Surge

ONGC surged 7.4 percent, the most since May 2010, to 337.70 rupees. Oil India gained 8.7 percent to 559.90 rupees.

India plans to trim its subsidy bill for food, fuel and fertilizer to 1.9 trillion rupees, or 2 percent of gross domestic product, in the year ending March 31. The state refiners lost 738.2 billion rupees from selling diesel below cost in the nine months ended Dec. 31.

Finance Minister Palaniappan Chidambaram aims to cut the budget deficit to 5.3 percent of GDP this financial year from 5.8 percent in the previous period. India forecasts Asia’s third-largest economy will expand at 5.7 percent this financial year, the weakest pace in a decade.

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editor responsible for this story: Iain Wilson at iwilson2@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.