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Cabinet Committee To Decide On...

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"We are still discussing the issue and a Cabinet meeting is scheduled for tomorrow," External Affairs Minister Pranab Mukherjee told reporters on the sidelines of an industry event in New Delhi on Tuesday.

He, however, refused to comment any further on the Cabinet agenda.

With consensus on raising petrol, diesel and domestic LPG prices still eluding, the Cabinet Committee on Political Affairs (CCPA) will meet early Wednesday morning.

If a consensus is hammered at the CCPA meeting, the Cabinet Committee on Economic Affairs (CCEA) may be convened, government sources said.

Prime Minister Manmohan Singh on Monday indicated an imminent fuel price hike when he said consumers cannot be fully insulated from the impact of rising global oil prices.

With the surge in global oil prices leaving a Rs 2,25,040 crore revenue deficit with oil companies, Singh has over the past one week held several rounds of consultations with senior ministers and UPA Chairperson Sonia Gandhi but a consensus has eluded the government.

Petroleum Minister Murli Deora, who has been pushing for a Rs 10 litre hike in petrol, Rs 5 per litre increase in diesel and Rs 50 per cylinder raise in LPG prices, has readied a note for consideration of the Cabinet.

However, the hike may be moderated to Rs 3, 5 or 7 a litre on petrol and Rs 2, 3 or 4 a litre on diesel. LPG prices may be raised by Rs 20 per 14.2-kg cylinder, sources said.

The recent reverses suffered by the ruling Congress in Karnataka Assembly elections and inflation rate climbing up to 45-month high of 8.1 per cent are underpinning the government's willingness to take drastic measures. Finance Minister P. Chidambaram has vehemently opposed a duty cut to cushion the impact of global prices and is also against raising prices as it may fuel inflation.

At current global oil prices, India's oil subsidy bill may shoot up three times to 2.2 per cent of the GDP this year.

State-run fuel retailers Indian Oil, Bharat Petroleum and Hindustan Petroleum face a revenue loss of Rs 2,25,040 crore on sale of petrol, diesel, domestic LPG and kerosene this fiscal on not being allowed to align retail prices with cost.

BPCL and HPCL would run out of cash to even import crude oil in July while IOC can sustain imports till September.

The three firms, who till last week were losing Rs 16.34 a litre on petrol, are incurring a loss of Rs 21.43 on sale of every litre since June 1. Similarly, the losses on diesel have widened to Rs 31.58 per litre from Rs 23.47 while on kerosene they have jumped to Rs 35.98 from Rs 28.72 per litre.

Losses on LPG have swelled to Rs 353 per 14.2-kg cylinder from Rs 305.90.

The basket of crude oil India buys averaged $124.02 per barrel in the second fortnight of May as against $115.09 in the first fortnight. The Indian basket was at $67 per barrel in February when petrol and diesel price were raised by Rs 2 and Re 1 a litre respectively.