The government is considering an increase of Rs 4 and 2 a litre in petrol and diesel prices, respectively, to moderate the impact of high international crude oil prices on state-run oil firms.

The Group of Ministers of fuel headed by External Affairs Minister Pranab Mukherjee is expected to meet later this month. This will be followed by a meeting of the Cabinet and a hike is likely in first week of February.

"The GoM on food is meeting on January 8. The GoM on fuel is likely to meet very soon after that," Petroleum Secretary M S Srinivasan said.

He said a moderate increase in fuel prices was likely, but refused to speculate on the quantum of increase. The GoM has not met even once since its constitution in November. Sources close to the Congress party, which is heading the UPA coalition government, said a hike of Rs 4 in petrol and Rs 2 in diesel was being considered.

Indian Oil [Get Quote], Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 69,753 crore (Rs 697.53 billion) on sale of petrol, diesel, domestic LPG and PDS kerosene as government has not allowed them to raise prices in line with the price of imported crude.

Petrol is being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.

The current price of Indian basket of crude oil is higher by around $22-23 a barrel over the international price prevailing at the time of last increase in petrol and diesel prices on June 6, 2006, officials said.