In an effort to moderate the impact of high international crude oil prices on state-run oil firms, the government is likely to increase the prices of petrol and diesel by Rs 4 and 2 per litre respectively.
A group of ministers (GoM) chaired by minister of external affairs Pranab Mukherjee, constituted to look into the fuel pricing issues, is slated to take a decision on the issue later during the month.
The Cabinet, too, will hold a meeting on the issue. The hike is likely to be effective from the first week of February.
The GoM would meet after January 8, once the GoM on food is over, petroleum secretary M S Srinivasan told reporters here.
He said a moderate increase in fuel prices was likely, but refused to speculate on the quantum of increase. The GoM has not met even once since its constitution in November.
Sources close to the Congress party, which is heading the UPA coalition government, said a hike of Rs 4 in petrol and Rs 2 in diesel was being considered.
IndianOil, Hindustan Petroleum and Bharat Petroleum, are set to lose around Rs 69,753 crore on the sale of petrol, diesel, domestic LPG and PDS kerosene as the government has not allowed the oil PSUs to raise prices in line with the price of imported crude.
Oil and Natural Gas Corp (ONGC) alone is likely to cough up about Rs 17,000 crore this financial year to subsidise petrol, diesel, domestic cooking gas and kerosene.
Addressing reporters here on Wednesday, ONGC chairman and managing director RS Sharma said, ?During first half of 2007-08 fiscal, we paid Rs 7,448 crore subsidy. For the full year we expect the payout to cross Rs 17,000 crore.?
The upstream companies such as ONGC, Oil India and GAIL have to shoulder about one-third of the under-realisation on sale of petrol, diesel, domestic cooking gas (LPG) and PDS kerosene under the subsidy-sharing mechanism. The government shoulders 42.7% of the under-realisation by way of issue of oil bonds and the rest oil retailers absorb.