State-owned oil companies may raise petrol prices by Rs 1.50-Rs 2 per litre early next week, while a Rs 2 a litre increase in diesel rates is under government consideration, a senior official said on Wednesday.
"Petrol prices will be raised after the current session of Parliament ends on December 13," the official said here.
A raise in diesel prices also looks imminent, as crude oil prices have inched closer to $90 per barrel, widening the gap between domestic retail rates and their imported cost.
Petroleum Minister Murli Deora met Finance Minister Pranab Mukherjee on Tuesday to discuss convening a meeting of the Empowered Group of Ministers next week to decide on increasing diesel rates.
"In all probability, diesel prices may be hiked by Rs 2 per litre," he said.
Indian Oil, Hindustan Petroleum and Bharat Petroleum had last raised petrol prices on November 9, just before the winter session of Parliament began.
"The last hike of Rs 0.32 a litre was lower than Rs 1.1 per litre desired increase to make domestic retail rates at par with international prices," he said. "The three firms are currently losing about Rs 2.40 per litre on petrol."
When contacted, Oil Secretary S Sundareshan said the government will not intervene in fixation of petrol prices, which had been deregulated in June.
On diesel price raise, he said: "It will be a political decision".
"Oil marketing companies are losing Rs 4.71 per litre (in revenues) on diesel sales. If global crude oil prices show no sign of abating, the government will have to take a view," he said.
IOC, BPCL and HPCL currently lose Rs 75 crore in revenues on selling diesel below its imported cost.
Freeing diesel prices from government control, as had been decided in June, is not possible at this juncture since it would mean passing on the entire Rs 4.71 a litre increase to consumers.
"That will be unreasonable," he said. "But some price increase will have to be passed on to consumers."
He did not elaborate on the quantum of raise being considered.
The official said Deora discussed how the Rs 65,839-crore revenue loss IOC, BPCL and HPCL are expected to register this financial year on selling diesel, domestic LPG and kerosene below cost, will be compensated.
So far, the finance ministry has committed to provide only Rs 13,000 crore in cash, even as the oil ministry wants about half of the revenue loss to be met by the government.
Another one-third would be provided by upstream firms like Oil and Natural Gas Corporation.