Fuel Price Increase...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[(Bloomberg) An increase in the domestic fuel prices is inevitable in the face of surging crude rates, and the government will work out the extent of the rise later in the day, Petroleum Secretary M.S. Srinivasan said on Friday. Crude oil's sharp rally has hurt consumers around the world and countries like Indonesia and Taiwan are expected to raise prices. China said on Thursday it would retain controls on fuel prices, denying rumours about price deregulation. Srinivasan said the oil ministry was also seeking a scrapping of import duty on crude oil and a reduction in customs duty on petrol and diesel to 2.5 percent from 7.5 percent in a bid to ease losses at state run retailers. &quot;Specific quantity of price increase will be worked out by this evening,&quot; he said. India sets the heavily discounted prices at which widely consumed fuels are sold to help fight inflation and protect hundreds of millions of poor from price shocks. It partially compensates oil retailers by issuing oil bonds, while upstream companies also share some of the burden. The government, which faces a string of state elections this year and a general election by May 2009, is worried that higher fuel prices would stoke inflation, already at a 3-&frac12; year high of 7.8 percent. But with oil above $130 and mounting losses of state firms such as Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, the government does not have many options. &quot;We need to take immediate steps to save oil companies and I have discussed the issue with the prime minister last night,&quot; Oil Minister Murli Deora told reporters. The cost of the crude oil India imports has doubled since June 2006 but after a series of retail price revisions fuel costs less now than it did two years ago. &quot;We are trying to see that some action is taken immediately,&quot; Deora said. The prospect of some relief for state refiners, which are suffering a combined revenue loss of 5.5 billion rupees ($128.5 million) every day as they process costly crude but sell fuels cheaply, helped their battered shares rise in the Bombay Stock Exchange. IOC was up 4.2 percent, HPCL was up 4.5 percent and BPCL was up 5.2 percent at 0514 GMT, while the benchmark index had risen only 0.5 percent. The refiners' shares fallen by a third to a half this year. (Reuters)