A decision on hiking fuel prices may be taken on Thursday at the meeting of a Group of Ministers. "The GoM is meeting tomorrow and I hope a decision is taken," Petroleum Minister Murli Deora said on Wednesday, but refused to speculate on the quantum of the hike that the group might recommend to the Union Cabinet. "I can't say anything on that," Deora said.
Government sources said petrol prices could be increased between Rs 2-4 a litre, while diesel may turn costlier by Rs 1-2 per litre. The GoM might also suggest reducing customs duty on crude oil and excise duties on petroleum products. The GoM, headed by External Affairs Minister Pranab Mukherjee, will discuss the options and make a recommendation to the Cabinet.
Indian Oil, Hindustan Petroleum and Bharat Petroleum together are projected to lose Rs 71,808 crore on fuel sale in 2007-08 if prices and duties are not revised. They currently lose Rs 9.20 per litre on petrol, Rs 11 a litre on diesel, Rs 331 per LPG cylinder and Rs 20 per litre on kerosene.
Petrol and diesel prices were last raised in June 2006 when crude oil was at $ 67 a barrel. It is around $ 92 per barrel in international markets. LPG prices were last raised by Rs 20 per cylinder in November 2004 when crude was at $ 34 a barrel, while kerosene prices have not been changed since 2002 when crude was at $ 23 a barrel.
Sources said during April-September, oil bonds worth Rs 11,257 crore were issued to oil companies, while upstream firms like ONGC and GAIL contributed Rs 8,788 crore.
A Re one per litre increase in petrol price would give Rs 90 crore a month additional revenue to oil companies. A similar hike in diesel and kerosene would fetch Rs 360 crore a month and Rs 95 crore respectively.