India Refiners Advance After Raising Fuel Prices: Mumbai MoverRakteem Katakey
Indian Oil Corp., the nation’s biggest refiner, was headed for its highest close in 10 days after increasing fuel prices from Feb. 16.
Indian Oil gained as much as 3.1 percent to 324.50 rupees, its highest since Feb. 7, and traded up 1.6 percent as of 9:20 a.m. in Mumbai. Bharat Petroleum Corp. rose 2.3 percent to 388.10 rupees and Hindustan Petroleum Corp. 2.2 percent to 317.20 rupees. The benchmark Sensitive Index increased 0.2 percent.
Indian Oil raised prices of diesel, the most widely used fuel in India, by 1.1 percent to 48.16 rupees (88 U.S. cents). The increase was the second in two months. Gasoline rates were raised by 2.7 percent to 69.06 rupees a liter in New Delhi.
Prime Minister Manmohan Singh’s government last month allowed the three refiners to raise diesel prices on their own every month till the deficit for below-cost sales is wiped out, as he seeks to narrow a budget deficit and avoid a rating downgrade.
“The government is very serious about managing the fiscal deficit and subsidy payments,” K.K. Mital, a fund manager at Globe Capital Market Ltd., said by phone from New Delhi. “This will help the refiners cut their losses, and ultimately benefit the government.”
Indian Oil will continue to lose 10.27 rupees per liter on the sale of diesel, the New Delhi-based refiner said in a Feb. 15 statement. It is losing 31.60 rupees a liter on kerosene and 481 rupees on every 14.2 kilogram bottle of liquefied petroleum gas used for cooking.
The government orders Indian Oil, Bharat Petroleum and Hindustan Petroleum to sell diesel, kerosene and cooking gas below cost to help curb inflation. The refiners are partially compensated by the government and state-run explorers including Oil & Natural Gas Corp. give discounts on the crude they sell to the refiners. Gasoline is deregulated.
Indian Oil’s loss on fuel sales is expected to be more than 860 billion rupees in the year ending March 31, according to the Feb. 15 statement. The three refiners together are projected to lose 1.6 trillion rupees in the period.
Finance Minister Palaniappan Chidambaram is seeking to narrow the budget deficit to 5.3 percent of gross domestic product in the year ending March 31 from 5.8 percent last year.
India plans to trim its subsidy bill for food, fuel and fertilizer to 1.9 trillion rupees, or 2 percent of GDP, this financial year. The state refiners lost 738.2 billion rupees from selling diesel below cost in the nine months ended Dec. 31.