Nov. 16 (Bloomberg) -- Indian Oil Corp., the nation’s biggest refiner, dropped to the lowest in more than two years in Mumbai trading after state refiners cut gasoline prices for the first time since January 2009.
Indian Oil fell 2.8 percent to 267.90 rupees at the close, the lowest level since Aug. 3, 2009. Bharat Petroleum Corp., the second-biggest state-refiner, dropped 4.2 percent and Hindustan Petroleum Corp. lost 5.1 percent.
Refiners reduced gasoline prices by 2.22 rupees a liter in New Delhi starting at midnight, S. Varadarajan, finance director at Bharat Petroleum, said yesterday by telephone. Gasoline now costs 66.42 rupees ($1.31) a liter in the capital.
Refiners have room to cut gasoline prices after overseas rates of the fuel declined, according to a release by Indian Oil. Gasoline prices were raised three times in the past six months as the refiners sought to cut losses from selling fuels below cost. The latest increase on Nov. 4 was criticized by the main opposition Bharatiya Janata Party and allies of Prime Minister Manmohan Singh’s government.
“Fuel pricing in India is always more of a political decision rather than an economic one,” said Kamlesh Kotak, vice president of research at Asian Markets Securities Pvt. in Mumbai. “Parliament starts next week and the government wants to give out a positive picture.”
While the government controls prices of fuels including diesel, cooking gas and kerosene to curb inflation in Asia’s second-fastest growing major economy, gasoline pricing was freed in June 2010 and linked to international levels.
The price of 92-RON gasoline for loading in Singapore’s ports averaged $114.14 a barrel in the first two weeks of this month, 5.7 percent less than $121.07 in the second fortnight of October.
China cut fuel prices for the first time this year on Oct. 9, by 3.5 percent for gasoline and 3.9 percent for diesel, after crude oil costs fell.
Indian Oil made a profit of 1.85 rupees a liter on gasoline sales, allowing prices to be cut to a level where the refiner makes no profit or loss, the company said in the e-mailed release yesterday.
The refiners posted losses for the second straight quarter in the three months ended Sept. 30. after selling fuels below cost. India’s inflation rate exceeded 9 percent for the 11th consecutive month in October, the commerce ministry said.
--Editors: Stephen Cunningham, John Chacko
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