Petrol and diesel prices are likely to go up by at least Rs 2 per litre after the Lok Sabha polls, once the current freeze on revising prices in step with the cost of the raw material -- crude oil -- is lifted.
The public sector oil companies, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and IBP, are estimated to have taken a hit of around Rs 3,600 crore (Rs 36 billion) during the January-March period this year so as not to hurt the government's 'India Shining' image during polls, industry sources said in New Delhi.
The oil companies have not been allowed to revise petrol and diesel prices even though crude oil prices have risen by close to $4 a barrel since the last revision on January 31.
After dismantling of the administered pricing mechanism, oil companies were given freedom to revise prices of petrol and diesel every 15 days based on the average of crude oil they bought from the international market during the fortnight.
Sources said the Cabinet had last month, during an informal discussion, directed the oil companies to keep all price increase on hold until the elections were over.
Prices were also kept on hold ahead of the November Assembly elections in Madhya Pradesh, Delhi, Rajasthan and Chhattisgarh. After the elections, prices were raised by Rs 2 per litre in two installments to compensate the oil firms for their past losses.
"The petrol and diesel prices may go up at the May 15 revision after the Lok Sabha polls are over," sources said.