Petroleum ministry has sought an increase of Rs 2.50 per litre in petrol and Rs 1.30 per litre in diesel prices in line with hike in tax rates announced in Budget and asked oil firms to bear the impact of surge in global oil prices.

The ministry has demanded that the increased incidence of excise duty on petrol and diesel, the hike in road cess and the marginal cost of supplying cleaner fuel be passed on to consumers while the oil companies will bear the rise in cost due to spike in international prices, officials said.

The hike in excise duty and road cess warrant a Rs 2.20 per litre increase in petrol and Rs 1.06 a litre rise in diesel prices. Additionally, the cost of supplying cleaner fuel from April 1 came to Rs 0.30 per litre for petrol and Rs 0.24 a litre for diesel.

The oil companies will have to take on themselves the Rs 0.37 per litre increase necessitated in petrol prices due to the surge in international oil prices and Rs 2.43 a litre on diesel.

Separately, the ministry has sought Rs 20 per cylinder hike in LPG and Rs 3 per litre increase in kerosene prices to cut the Rs 81.93 per cylinder loss on LPG and Rs 10.31 a litre loss on kerosene sale.

Speaking to reporters Petroleum Secretary S C Tripathi said, "International oil prices have lowered when compared to the last fortnight of April and first fortnight of May. (But) oil companies are still loosing on fuel sale... the under-recoveries may be lower than April-May but over a full year, they are unsustainable."

Petrol and diesel prices have remained unchanged since November 2004 despite a $10 a barrel increase in crude oil prices. Kerosene prices have remained unchanged for over three years now while LPG prices were last revised in mid-2004.

Tripathi said his ministry had presented facts to the Prime Minister's Office and "it was now for the government to take a decision." He did not say when the Cabinet is likely to discuss fuel price revision.

While the public sector oil companies lost Rs 17,850 crore (Rs 178.5 billion) on LPG and kerosene sale in 2004-05, during the current year they would loose Rs 13,720 crore (Rs 137.2 billion) if the prices are not revised.

On petrol and diesel, the revenue loss would jump from Rs 2,190 crore (Rs 21.9 bilion) last year, to an estimated Rs 22,770 crore (Rs 227.7 billion) this fiscal.

"The under-recoveries (revenue loss) cannot be sustained," he said.