Prime Minister Manmohan Singh will this week review petrol and diesel prices, which have remained unchanged since August despite crude oil surging to an all-time high of over $53 a barrel.
"Every 15 days, we have to review fuel prices and they will be reviewed with respect to international prices on October 15. Whether the prices will be hiked or not will be decided after I place before the prime minister all the facts," Petroleum Minister Mani Shankar Aiyar told reporters in New Delhi on Tuesday.
Aiyar will meet Singh on Thursday or Friday to brief him on the impact of rising crude prices on the Indian economy and the burden on state-run oil firms due to unchanged prices.
"Interests of consumers will be the foremost consideration. We want Indian oil companies to make their contribution for protection of the economy and share the burden on consumers," he said indicating that a close to Rs 3 per litre hike in diesel prices and Rs 0.50 per litre in petrol prices, needed to put domestic prices in step with international trend, may not be carried through.
Any hike in petrol and diesel prices at this juncture will fuel inflation, hovering at more than 7 per cent.
"We will protect the economy and ensure interests of public sector companies are also guarded," Aiyar said, adding that the losses suffered by marketing companies on selling fuel would be offset by gains made by oil producers like ONGC by way of getting higher price for their produce.
"The burden would be shared equitably," he said.
Asked if petrol and diesel prices would be raised on October 15, the next due date for auto fuel price revision, Aiyar said: "Only God knows and the prime minister know."
Petrol and diesel prices were last raised on August 1 and since then they have remained unchanged despite crude oil prices jumping by over 30 per cent.
Oil marketing companies -- Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd -- are due to meet on October 15 as part of a fortnightly review of retail prices.
Aiyar said the mechanism for revising prices within a fixed band still existed. "The band mechanism was evolved for normal times and we had said if the hike needed to match the rise in international prices was beyond the band, the government will step in."
Although India's petroleum sector was deregulated in April and state-run oil companies were allowed to adjust domestic oil prices in line with global levels every two weeks, the government has been intervening to keep prices down in the face of record high crude prices.
Rising oil prices have been one of the major contributors to surging inflation, which hit a three-and-half year high of more than 8 per cent in August.