June 28, 2012 / 3:41 PM / 5 years ago

UPDATE 1-Indian fuel retailers cut gasoline prices -IOC

* Price cut by 3.5 pct in New Delhi

* Second cut this month after 11 pct increase in May (Adds details, quote)

NEW DELHI, June 28 (Reuters) - India’s state-run fuel retailers will cut gasoline prices by 2.46 rupees ($0.04) per litre from Friday, Indian Oil Corp said, responding to softer global oil and petrol prices.

A litre of gasoline will cost 67.78 rupees in the capital New Delhi, state-run IOC, the country’s biggest fuel retailer, said in statement on Thursday. The reduction is the equivalent of a 3.5 percent price cut.

The cut, the second in a row this month, comes after gasoline prices were raised by a record 11 percent in May - the first revision in prices for about six months.

The increase triggered a public outcry and a political backlash in a country suffering from high inflation, even though petrol accounts for only about 10 percent of total fuel consumption.

India liberalised petrol prices in June 2010 but the government continues to influence refiners who in April threatened a hefty increase if the government did not compensate them for losses incurred on sales.

India’s three state-run fuel retailers - IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp - tend to move their prices together.

“(Retailers) continue to closely monitor the international oil prices and the evolving scenario in USD-INR (dollar-rupee) exchange rates to assess their potential impact on selling prices in future,” IOC said in a statement.

The decrease in other states would vary depending on local taxes, the company added.

Every one rupee fall in the value of the Indian currency against the dollar requires an increase of 0.77 rupees per litre in retail gasoline prices, while every dollar fall in delivered prices of Singapore gasoline should mean a 0.34 rupees decrease.

Softening Singapore gasoline prices GL92-SIN and global oil prices have partially offset the impact of a declining rupee which increases input costs for refiners, offering the window for the price cut.

Diesel, which accounts for more than 40 percent of fuel demand, poses greater dilemmas for the world’s fourth-biggest oil importer, as any increase would fuel inflation at a time when Asia’s third-biggest economy is slowing down.

Heavy subsidies on the fuel have led to a surge in demand for diesel powered cars, prompting calls from some government officials to impose a tax on the vehicles.

$1 = 57.1862 Indian rupees Reporting by Nidhi Verma and Ratnajyoti Dutta; Editing by Anthony Barker

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