OREANDA-NEWS. Fitch Ratings has said that Indian Oil Corporation Ltd's (IOC; BBB-/Stable) ratings, which are equalised to India's ratings, are not affected by the government's reduction of its stake in the company to 58% from 68%. The Indian government has proposed to reduce the state's shares in certain public-sector companies, while maintain controlling stakes in these companies, as part of a divestment plan.

The other two smaller state-controlled oil refining and marketing companies - Bharat Petroleum Corporation Limited (BBB-/Stable) and Hindustan Petroleum Corporation Limited (BBB-/Stable) - have historically had lower state ownership at 55% and 51%, respectively. Their ratings are also equalised with that of India.

The ratings of the three public-sector oil refining and marketing companies are equalised with that of the state in line with Fitch's Parent-Subsidiary Criteria. Fitch believes that the state continues to have close operating and strategic linkages with these entities despite the recent reforms to fuel prices and subsidy schemes. We believe these three companies will continue to be important policy tools that the state will use to meet socio-economic objectives when required.

The Indian government's diesel price deregulation in October 2014 took place after a substantial drop in global oil prices; the government's resolve to maintain its current approach to petroleum product pricing and subsidies in an environment of high crude prices is yet to be tested.