New Delhi: The Oil companies are likely to defer to June 15 an imminent hike in prices of petrol and diesel in view of the Parliament session beginning next week.

The new Petroleum Minister Mani Shankar Aiyar today (May 26, 2004) wrote to the Prime Minister for a cut in duties on petroleum products to give relief to national Oil firms who have been for the past five months selling fuels at price lower than the cost, informed sources said.

Aiyar, who is believed to have written a three-page letter to Manmohan Singh, suggested a three-tier strategy where consumers are passed on the least burden (read price hike) necessitated due to spurt in international crude oil prices.

As part of the strategy, prices of petrol and diesel may be raised in the band of Rs 1-1.50 per litre on June 16 (after the Parliament session ends of June 10) to give Oil companies additional revenues of Rs 370-505 crores a month, that will help then recoup the Rs 900 crore loss they suffered in January-May on selling petrol and diesel below the cost.

The next review of petrol and diesel prices is due on May 31 but the Congress-led Government is conscious of avoiding any confrontation with its allies particularly Left, ahead of the Parliament session, so the hike is being deferred.

Sources said the State-run firms will be asked to bear one-fourth of the Rs 130 per cylinder under-recovery on cooking gas (LPG). Aiyar has advised lowering of customs duty on LPG to nil from 8 per cent currently and halving the excise duty on the mass consumed cooking fuel to 8 per cent.

After this, only Rs 30 per cylinder will remain to be recovered from consumers which can be done over one year period, they said.