An Empowered Group of Ministers headed by Finance Minister Pranab Mukherjee is likely to meet early next month to decide on freeing petrol and diesel prices from government control.
The ministerial panel will also consider ways to deal with revenue losses on selling domestic LPG and kerosene below cost.
"The EGoM is likely to meet in the first week of June, either on June 4 or 5 to consider changes in the existing petroleum pricing mechanism," a senior petroleum ministry official said.
The government-appointed Kirit Parikh Committee report on petroleum prices has recommended deregulation of petrol and diesel and a partial increase in domestic LPG and kerosene prices.
Besides Mukherjee, the EGoM also includes Petroleum Minister Murli Deora, Agriculture Minister Sharad Pawar, Chemical and Fertiliser Minister MK Alagiri, Railway Minister Mamata Banerjee, Road Transport Minister Kamal Nath and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
In the first fortnight of the current month, the three Oil Marketing Companies, IOC, HPCL and BPCL, were losing Rs 272.5 crore per day on selling fuel below cost and going at this rate may end the current fiscal with a Rs 90,150 crore revenue loss.
The companies sell petrol at a loss of Rs 6.63 a litre, diesel at a loss of Rs 6.25 per litre, kerosene at Rs 19.74 per litre and domestic LPG at Rs 254.37 per cylinder.
In 2009-10, the three public fuel retailers -- Indian Oil, HPCL and BPCL -- have lost Rs 46,051 crore on selling subsidised petroleum products.
According to the subsidy-burden sharing formula for 2009-10, revenue loss incurred on petrol and diesel by the Oil Marketing Companies was borne by upstream companies like ONGC and Oil India, while the Government paid for the under-recovery on cooking fuel.
While the upstream companies shared about Rs 14,432 crore of the subsidy burden, the government shelled out Rs 26,000 crore for the fiscal 2009-10.
"The OMCs will have to bear the balance amount," said an Oil Ministry official.