"The excise duty increase, after factoring in a marginal customs duty cut, warrant a Rs 2.5 per litre increase in petrol prices and Rs 0.65-70 per litre on diesel.

But we are not passing on the increase in March," Indian Oil Corporation [Get Quote] director (Finance) P Sugavanam said. Besides this increase, the Rs 0.50 per litre additional cess on petrol and diesel will also be passed on to consumers only in April, he said.

For March, public sector oil companies will lose Rs 300 crore (Rs 3 billion) on sale of diesel and Rs 150-170 crore (Rs 1.5 to 1.7 billion) on petrol.

But the reduction in excise and customs duty to nil on LPG and kerosene would bring a Rs 150 crore benefit to IOC in March.

Sugavanam, however, said the excise and customs duty cut on LPG and Kerosene was insufficient to cover for the losses oil companies were suffering by selling the two mass consumer cooking fuels below the cost.