Friday, March 18 2005 18:09 Hrs (IST) - World Time -

New Delhi: Public sector oil firms want a massive Rs 5 per litre increase in petrol and Rs 4.30 a litre hike in diesel prices from April 1 in step with the steep rise in cost of raw material (crude oil) and new investments made in producing cleaner fuel.

With the basket of crude oil that Indian refiners import, touching an all time high of $ 51.64 a barrel, Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp have sought a Rs 3.50 per litre increase in petrol and Rs 2.80 a litre hike in diesel prices, a Government official said.

Besides, the oil firms also want Rs 1.50 per litre increase in the two fuel prices commensurate with the investments they had made for producing ultra low sulphur Euro III grade petrol and diesel for 11 major cities and Euro II auto fuel for the rest of the country from April 1.

The oil companies are investing over Rs 400 billion in upgrading fuel quality.

IOC, which controls half of the oil market, will loose Rs 2.50 bn on selling petrol and diesel below the cost in the second fortnight of March. For the full month, the loss is pegged at Rs 4 billion, the official said.

The official said the raise sought by the oil companies was besides the Rs 2.85 a litre increase in petrol and Re 1 per litre hike in diesel prices necessitated by the Budget 2005-06 proposal to raise excise duty on the two fuel.

Not passing on the increased incidence of excise duty would result in around Rs 2.64 bn (about Rs 1.06 bn on petrol and Rs 1.58 bn on diesel) loss to them every fortnight.