The government has set up a committee to work out sharing by producers and retailers the losses likely to accrue from the decision to freeze LPG and kerosene price for a year despite rising cost.
"A ministerial committee has been formed to devise a formula for sharing of the cost," petroleum secretary B K Chaturvedi said.
The likely options under consideration, he said, included upstream producing firms like Oil and Natural Gas Corp and Oil India and downstream retailers like Indian Oil, Hindustan Petroleum and Bharat Petroleum footing one-third of the cost each, while the remaining one-third coming from margins on other petroleum products.
The other option is that the cost is equally shared between ONGC, OIL and GAIL on the one side and IOC, BPCL and HPCL on the other.
With an eye on the coming assembly polls in four states and next year's general election, government had last week frozen LPG and kerosene prices for a year and deferred phasing out of subsidy on the two mass cooking fuels by two years to 2007.
Rise in crude oil prices had necessitated a Rs 106.30 per cylinder increase in LPG prices in Delhi and Rs 3.03 per litre in kerosene price but the Cabinet, at its meeting on September 11, asked state-run oil firms, which had made record profits last fiscal, to foot the bill.