New Delhi: The proposed increase in the selling price of petrol and diesel has been postponed for the time being on account of the mounting tension on the Indo-Pak border.

Plans to hike petrol prices by Rs 2.50 to Rs 3 per litre and diesel by Rs 1.50 per litre this month following hardening of global crude oil prices has been deferred for the time being, senior Petroleum Ministry officials said.

"We are watching developments very closely and there is not likely to be any change in retail selling prices over the next eight to 10 days," they said.

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.

Sources said also under consideration is cut in excise duty on petrol from 32 per cent to 24 per cent and on diesel from 16 per cent to 12 per cent to give relief to state-run oil companies which are incurring huge losses on selling product below the price of crude.

"Price increase would be more if it is not timed with cut in excise duty. We are working on that," sources said but added no meeting has been scheduled between Petroleum Minister Ram Naik and Finance Minister Yashwant Sinha on this issue.

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

PTI