'Reasonable' hike in oil prices soon

A "reasonable" hike in prices of automobile fuels is around the corner.

After holding prices steady for almost a year, during which crude oil prices nudged $100-a-barrel, the government is likely to finalise the price increase at a meeting of a group of ministers "sometime in the second week of January," said a senior petroleum ministry official.

"We can not let the oil marketing companies continue the losses they are making. Neither can the common man be burdened with a huge increase in fuel prices. We are, however, looking at a reasonable hike in petrol and diesel prices," said the official.

The three government-owned oil companies "" Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) "" are losing over Rs 300 crore a day due to the gap between the actual subsidised selling price and the desired selling price which would cover all costs.

The share prices of these companies have been on an upswing in anticipation of the hike. IOC's share price on the Bombay stock exchange has risen 37.16 per cent in the last month. BPCL's share price has increased by 21.16 per cent and HPCL's 19.54 per cent. The IOC and HPCL stock also touched a 52-week high on Friday.

Petroleum Minister Murli Deora is set to meet Gurudas Dasgupta of the CPI next week to garner support for the hike. He met CPI (M) leaders Sitaram Yechury and Tapan Sen earlier this week.

"The final recommendations should come by the second week of January," Deora said.

The Indian basket of crude oil has since risen to over $90 per barrel, averaging $85 per barrel in November and December.

The ministerial group was scheduled to meet on December 14, but the meeting was postponed due to the Gujarat elections, officials said.