The Cabinet headed by Prime Minister Manmohan Singh may meet on Friday to consider raising petrol and diesel prices among other measures to bailout state run firms that have been reeling under unprecedented high crude prices.

With Indian Oil [Get Quote], Hindustan Petroleum and Bharat Petroleum projected to lose Rs 200,000 crore (Rs 2,000 billion) in revenues on sale of petrol, diesel, domestic LPG and kerosene below import cost, industry sources said a hike in the range of Rs 2 to 5 per litre appears on the cards.

Petroleum Minister Murli Deora on his part neither denied nor confirmed Cabinet being scheduled for Friday.

"We are discussing all possible measures to help and protect our public sector oil companies. . . some remedial measures need to be taken (urgently)," he told reporters.

The three firms are currently losing Rs 450 crore (Rs 4.50 billion) in revenues on fuel sales every day. Petrol is being sold at a loss of Rs 16.34 a litre, diesel at Rs 23.49 per litre, LPG at Rs 305.90 per cylinder loss and kerosene at a discount of Rs 28.72 per litre.

Deora has called a meeting of heads of the oil PSUs tomorrow morning and after that may brief the Cabinet of the financial strain on the companies in view of international crude prices topping $135 a barrel.

"I cannot rule in or rule out anything at this stage," Deora said when asked if petrol and diesel prices hike was an option under consideration.

"We are concerned at the financial health of the PSUs," he said, but asked the consumers not to panic.

"There is no rationing of fuel as has been reported by one newspaper. We can never resort to such an anti-consumer practice. I have spoken to BPCL [Get Quote] chairman Ashok Sinha who has categorically denied such a move," he said.

Deora said state-run retailers IOC, BPCL and HPCL [Get Quote] were under severe financial strain and may have taken some measures to cut cost but fuel rationing was not being resorted to.

"I would like to plead with the public and consumers that there is no such move," he said. "The government is at work trying to solve the problems being faced by PSUs. There are some measures that are under discussions."

"Our PSUs have done great service to the nation. Besides making available auto and cooking fuel to every nook and cranny, they have also been selling at a price lower than the cost. This has caused some constraint and we are concerned about it," he said.

In Asian morning trade on Friday, New York's main oil futures contract, light sweet crude for July delivery, rose to a high of $135.04 a barrel before easing to $134.87.

The three firms are faced with a huge liquidity crunch and are borrowing Rs 3,500 crore (Rs 35 billion) a month to meet day-to-day expenditure. Borrowings of the three firms have reached Rs 65,000 crore (Rs 650 billion).

The government's bar on oil firms from raising fuel prices despite cost of raw material (crude oil) doubling to over $135 a barrel, is likely to see the three firms end the current year with a revenue loss of Rs 200,000 crore. Last year, the revenue loss was Rs 77,304.50 crore (Rs 773.45 billion).

The government makes up for just over half of the under realisation of oil companies on fuel sales through issuance of oil bonds, while 33 per cent of the losses is compensated by companies like ONGC [Get Quote] and GAIL. The rest is to be borne by the retailers.