The Congress-led UPA government is understood to have given an in-principle approval to three state-owned oil companies - Indian Oil, HPCL and BPCL - to increase petrol prices by Rs 4-5 a litre.
The government is, however, fearing a strong opposition from key allies including Mamta Banerjee's Trinamool Congress and DMK over the hike in the price of diesel and cooking gas.
UPA's allies including TCP and DMK are part of the Empowered Group of Ministers (EGoM) on fuel prices under finance minister Pranab Mukherjee that will take a final call on raising diesel and LPG prices.
A oil ministry official confirmed that an announcement on the petrol price hike is expected to be made by oil companies after a review meeting scheduled on March 31.
"Petrol prices stand decontrolled and we have no say in oil companies increasing prices of this fuel," a senior Congress minister told HT on the condition of anonymity. "However, as the petrol price hike was held back due to elections in five states, the sudden increase by Rs 4-5 a litre is bound to draw criticism from our allies including TMC and DMK."
A decision on the diesel and cooking gas price hike will be taken by the EGoM soon, he added. However, petrol prices need no approval and will be revised on March 31. "The actual increase would depend on government nod," he said.
Oil companies are currently losing Rs 5.1 per litre on petrol, over Rs 12 on diesel and close to Rs 380 per LPG cylinder. The prices of petrol were last revised on December 1 after which rates have not been changed because of Assembly elections.