UPDATE 2-India can not cut fuel prices until late Dec-Oil Min

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By Nidhi Verma

NEW DELHI, Nov 25 (Reuters) - India can not cut domestic fuel prices until after state polls end in late December due to rules barring populist pre-election politicing, its oil minister said, even as tumbling global crude prices made domestic sales profitable once again.

India, like China, has resisted cutting its government-set gasoline and diesel prices in recent months even after U.S. crude oil prices tumbled by nearly $100 or two-thirds from their early July peak above $147 a barrel, a fall that returned local refiners to profitability for the first time in years.

"Crude oil has fallen. We should reduce prices but we cannot do it before Dec. 24 because of the code of conduct," Oil Ministry Murli Deora told reporters on Tuesday, before a series of local elections staggered over the next four weeks.

With domestic fuel prices pegged at the crude oil equivalent of around $61 a barrel, private Reliance Industries (RELI.BO: Quote, Profile, Research) and Essar Oil (ESRO.BO: Quote, Profile, Research) are beginning to reopen petrol stations that were shuttered over the past year as New Delhi failed to raise pump prices to match the surge in imported crude oil costs.

Oil Secretary R.S. Pandey said Reliance was keen to resume retail fuel sales at some of its closed petrol stations, while Essar had revived 500 of its pumps.

He also said his ministry would send a proposal for price cuts and related subsidy issues to the cabinet before Dec. 24.

Asian countries that regulate domestic fuel rates have responded differently to the slump in global crude oil prices as the global economic crisis eats into demand in consumer nations.