Prime Minister Manmohan Singh on Thursday assessed the situation arising from global crude prices' record run and the government may decide later in the day on raising retail fuel prices and a compensation package for oil marketing companies.
External Affairs Minister Pranab Mukherjee, Finance Minister P Chidambaram, Oil Minister Murli Deora and Planning Commission Deputy Chairman Montek Singh Ahluwalia were at the meeting, in which the prime minister's principal secretary T K Nair also sat through.
The ministers did not take questions from the media after the meeting.
The Cabinet, sources said, may later in the day decide on the proposal to hike prices of petrol, diesel and LPG prices, as also reduction in excise duties.
The petroleum ministry has been pushing for a Rs 10 per litre hike in petrol prices, Rs 5 a litre in diesel tags, and Rs 50 per LPG (cooking gas) cylinder.
In the absence of a hike, state-run oil companies HPCL [Get Quote] and BPCL [Get Quote] would run out of cash to import crude in the next two months, while Indian Oil [Get Quote] Corp has said it would run out of money for buying crude by September-end.
The hike pushed for by the petroleum ministry would only help curtail the estimated Rs 225,000 crore (Rs 2,250 billion) revenue losses of oil companies this fiscal.
The companies, at present, are selling petrol at a discount of Rs 16.34 a litre, diesel at a loss of Rs 23.49 per litre, LPG cylinder at a loss of Rs 305.9 and kerosene at a discount of Rs 28.72 per litre.
Indian Oil, Bharat Petroleum and Hindustan Petroleum currently lose close to Rs 580 crore (Rs 5.80 billion) per day on sale of petrol, diesel, domestic LPG and kerosene as they have been barred from raising prices in line with rise in cost.
Crude prices have more than doubled since February when petrol price was hiked by Rs 2 per litre and diesel by Re 1 per litre. Early this month, the prices breached $135 a barrel mark.
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. With borrowings touching Rs 65,000 crore (Rs 650 billion), the companies are now talking to banks to raise borrowing limit, the official added.
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