Business | Oil & Gas
India's oil ministry holds retail fuel prices steady
India doesn't plan to cut retail fuel prices until state-run refiners stop losing revenue from selling products below cost, the oil ministry's most senior official said. Refiner shares advanced.
- Bloomberg
- Published: 23:55 October 23, 2008
Mumbai: India doesn't plan to cut retail fuel prices until state-run refiners stop losing revenue from selling products below cost, the oil ministry's most senior official said. Refiner shares advanced.
"Our priority is that oil companies stop making losses, under-recoveries have got to stop," R.S. Pandey, secretary to the oil ministry, said by telephone from New Delhi yesterday. "Although crude oil is falling, the weakening rupee remains a concern."
Meanwhile, Oil Minister Murli Deora told parliament that India would decide on fuel prices in a week.
India, which controls fuel prices to curb inflation, increased fuel prices in June and said it would consider cutting them when oil prices reach $67 a barrel. Indian Oil Corp., the nation's biggest refiner reported a 72 per cent decline in first- quarter profit while its state-run counterparts had losses after selling fuels at government-controlled prices.
Crude oil for December delivery was at $66.81 a barrel, up 6 cents, at 12:20pm Singapore time on the New York Mercantile Exchange. It earlier rose as much as $1.06, or 1.6 per cent, to $67.81 a barrel.
Oil-refiner shares gained as India's benchmark stock index declined for the second day. Indian Oil gained 1.2 per cent to Rs393 at 10.50am in Mumbai trading. Bharat Petroleum Corp., the second-largest state refiner, added 1.8 percent to Rs328.15 and Hindustan Petroleum Corp. rose 3.7 per cent to Rs217.5.
The government may not reduce fuel prices until crude oil, which soared to a record $147.27 a barrel in July, falls to below $61 a barrel, Pandey said.
"Oil prices and the depreciating rupee are being assessed continuously," Pandey said.
"Most of the gains from falling oil are being negated by the rupee."
India's rupee fell to an all-time low against the dollar yesterday after stock markets in the region declined. The currency slid as much as 1.2 per cent to 49.860 a dollar before trading at 49.76 as of 10:13am in Mumbai, according to data compiled by Bloomberg, heightening concern overseas funds will sell more local equities.
State-run refiners are losing as much as Rs2.8 billion every day on combined sales of gasoline, diesel, cooking gas and kerosene.
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