Petrol, diesel prices may be raised

New Delhi: Petrol and diesel prices may be raised by Rs 1-1.50 per litre when Petroleum Minister Mani Shankar Aiyar meets Prime Minister Manmohan Singh on Thursday afternoon to finalise means to wriggle through rising cost of crude and increase in taxation.

Though an increase of over Rs 4.50 a litre on petrol and more than Rs 5 per litre was needed in step with the spurt in crude oil prices and increase in tax rates, the government may settle for a moderate increase, officials said here.

"We expect a decision tomorrow as the present situation may soon snowball into a crisis with cash-rich public sector oil firms sinking into red," an official said.

The hike in excise duty on petrol and diesel and increase in road cess warrant a Rs 2.20 per litre increase in petrol and Rs 1.06 a litre raise in diesel prices. Additionally, the cost of supplying cleaner fuel from April 1 came to Rs 0.30 per litre for petrol and Rs 0.24 a litre for diesel. Remaining of the over Rs 4.50 a litre hike in petrol and more than Rs 5 per litre increase in diesel prices was warranted due to raw material (crude oil) becoming dearer.

"Prime Minister had almost completed consultations with UPA government's coalition partners particularly the Left parties before Aiyar left for three-nation tour on June 4. Now that Aiyar is back, a decision is likely tomorrow," he said.

A moderate hike in petrol and diesel prices was being considered with a view to limiting the impact on common man. Indian Oil Corp, Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd and IBP, who are losing Rs 72 crore per day due to non revision in petrol, diesel, LPG (cooking gas) and kerosene prices, made a cash loss of Rs 1,424 crore in March and April.