New Delhi: The price of petrol and diesel is likely to go up by Rs 2.50 to 3 per litre and Rs 1.50 per litre respectively later in May in step with a rally in global crude oil prices.

State-run oil retailing companies are selling petrol at Rs 4 per litre loss and diesel at Rs 3.43 per litre loss as crude oil price has increased to over $ 25 per barrel as against the $ 20 a barrel budgeted at the time of last petroleum product price review.

Simultaneously, as a buffer for state-run oil companies the excise duty on petrol is likely to be brought down to 24 per cent from 32 per cent and on diesel to 12 per cent from 16 per cent to give relief to them as they are incurring huge losses on selling product below the price of crude, government sources said.

Lower excise duty after a hike in ex-storage price of the two products would be revenue-neutral - it would fetch the same amount of revenue as at present, sources said.

Sources said Petroleum Minister Ram Naik had already had one round of discussions with Finance Minister Yashwant Sinha on excise duty cuts and would have another round after Sinha returns from China.

"Everyone knows that oil companies are incurring losses to the tune of Rs 75-80 crore per day on selling products below the price of crude. Its now more of a political decision as oil companies cannot any further bear the losses," they said, adding a "political decision" on the quantum of price increase may come towards the end of May.

PTI