Thursday, May 4 2006 16:59 Hrs (IST) - World Time -

New Delhi: Petroleum Ministry will next week begin consultations on a possible hike in petrol and diesel prices to offset the Rs 75,000 crore revenue losses projected for oil companies in the wake of soaring international prices.

Petroleum Secretary M S Srinivasan will meet his counterpart in the Finance Ministry on May 8 to seek cut inimport and excise duties and raising of subsidies on cooking fuel as measures to help oil firms, official sources said.

On cards is a Rs 2-3 per litre hike in petrol and diesel prices and Rs 15-20 increase per LPG cylinder, but a decision would be taken only after consultations with allies including the Left.

Meanwhile, the ministry in a press release said, "No decision (on raising prices) has yet been taken."

"The process of consultation is yet to begin and it will take some time for this process to be completed and hence any reports of price hike in the meantime are pure speculative in nature and are baseless," it said.

State-owned oil retailing firms were losing Rs 9.34 per litre on selling petrol below the imported cost while the loss on diesel was Rs 10.43 a litre. Kerosene was being sold at a loss of Rs 16.78 per litre and LPG at Rs 220 per cylinder loss, according to officials.

State-run Indian refiners have been unable to raise government-capped retail fuel prices since September last year, despite the surge in crude oil prices to record 75 dollars a barrel. The non-revision of retail prices of petroleum products by the government is expected to lead to under-recoveries of an estimated Rs 75,000 crore by oil marketing companies in 2006-07.

Oil Marketing Companies (OMCs) - Indian Oil Corp (IOC), Hindustan Petroleum Corp and Bharat Petroleum Corp together lost Rs 4,722 crore in revenues in April.

In the year 2005-06, the OMCs' gross under-recoveries amounted to Rs 39,600 crore.

IOC, which controls roughly half of the fuel market, lost Rs 2,450 crore on fuel sales in April and is projecting a loss of Rs 1,560 crore in the first fortnight of May if prices remained unchanged, officials said.

Srinivasan's meeting would be followed by Petroleum Minister Murli Deora meeting Finance Minister P Chidambarampossibly on May 11 and the two then meeting the Prime Minister on May 15.

The Cabinet would thereafter take up the issue, officials said.