(EnergyAsia, June 4 2012, Monday) — Caving in after days of angry protests and reports of fuel hoarding in major Indian cities, state-owned oil refiners said they partially rolled back a 10%-11% hike in gasoline prices on June 3.

In New Delhi, gasoline now costs 71.16 rupees a litre instead of the record 73.18 rupees that oil companies began charging on May 24 after raising it by 7.54 rupees to recover rising downstream losses. (US$1=Rs55).

Retail prices vary across the country depending on state value added and sales tax rates, said Indian Oil Corp (IOC), the country’s largest refiner.

In a statement, IOC said state downstream companies operate at a loss from selling fuel to the public at subsidised rates.

They have also been hit by foreign exchange losses due to the weakening of the rupee against the US dollar which India uses to pay for its oil imports.

The Indian government is under pressure to reduce fuel subsidies to check its ballooning trade and budget deficits.

In a joint statement, the country’s three main state companies, IOC, Hindustan Petroleum Company (HPCL) and Bharat Petroleum Company (BPCL) said their combined profit of Rs61 billion for the last financial year to March 31 2012 was a “mere” 0.7% of their revenue to Rs8.33 trillion.

They said this poor return on investment “is not adequate” to support their huge expenditure to modernise operations, invest in infrastructure, produce clean fuels and meet the country’s rising energy demand.

They have been unable to raise the prices of the “sensitive” fuels including diesel, kerosene and liquefied petroleum gas (LPG) due to strong opposition from political parties, worker groups and the farming lobby.