The government is unlikely to take up the issue of reducing petrol, diesel and domestic LPG prices on Thursday as consultations on petroleum ministry's simultaneous proposal for freeing auto fuel pricing were not complete.
"I don't think the Cabinet will take up the issue on Thursday," a senior Cabinet minister, who wished not to be identified, said. The Petroleum Ministry is pushing for a Rs 5 per litre reduction in petrol prices, Rs 2 a litre on diesel and Rs 25 per domestic LPG cylinder.
Alongside, retail pricing of petrol and diesel is also proposed to be freed from government control, which would effectively mean a revision in price every fortnight in step with changes in the international market.
"While it is easy to free pricing today when international crude oil prices are below $40 a barrel but there is no consensus yet on if the companies should be allowed to raise prices when oil moves up," he said.
An alternate proposal of giving oil companies limited freedom of adjusting prices within a specified band may also be put up before the Cabinet "in next few days", he said.
State-run oil companies are currently making Rs 9.70 a litre profit on sale of petrol, Rs 3.70 a litre on diesel, but are loosing Rs 31.70 per LPG cylinder and Rs 11.69 on every litre of kerosene.
"Auto fuel prices can be freed only after a mechanism to compensate for the losses on LPG and kerosene is devised," he said. The government will mop up additional revenues by increasing excise duty on petrol and diesel by a minimum of Rs 1 per litre.
For losses on LPG and kerosene, the Cabinet may decide on issuing a Rs 30,000 crore (Rs 300 billion) additional oil bonds this fiscal.
Petrol and diesel prices were cut last in December by Rs 5 a litre and Rs 2 per litre, respectively, as global crude prices fell to four-year lows.
© 2025 Rediff.com -