An Empowered Group of Ministers (EGoM) is likely to meet on December 30 to consider hike in diesel and domestic LPG prices.
This comes in the wake of crude oil prices ruling at a two year high of $93.59 per barrel and widening the gap between retail fuel price and their cost.
"The EGoM meeting has tentatively been proposed for the afternoon of December 30," a government official said.
Oil prices today rose to the highest over the past two years supported by a weak dollar and chilly weather in northern Europe and the US that increased heating fuel demand.
"However, a confirmation of the date is awaited from EGoM head (Finance Minister Pranab Mukherjee)," he said.
Oil Secretary S Sundareshan had yesterday stated that the EGoM will meet before month end to consider raising diesel and domestic LPG prices.
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The EGoM was originally scheduled to meet on Wednesday but has been deferred due to non availability of certain ministers in the grouping.
The ministerial panel may consider a Rs 2 per litre hike in diesel prices to narrow the difference between the domestic retail price of the transport fuel and its imported cost.
"The under-recovery (or the revenue oil companies lose) on diesel today stands at Rs 6.09 per litre," the official said.
Besides diesel, the oil firms lose Rs 17.72 per litre on PDS kerosene sales and Rs 272.19 on (14.2-kg) LPG cylinder.
Sundareshan had yesterday stated there was "certainly" a need to raise LPG prices as the expert group on fuel pricing headed by Kirit Parikh had suggested hiking domestic cooking fuel price by Rs 100 per cylinder. But rates were increased by only Rs 35 per bottle in June.
The necessity of a price increase has arisen because global crude oil (raw material) has climbed to over $93 per barrel from $73-74 at the time of last revision in June.
Even after last week's steep Rs 2.94-2.96 a litre hike, the retail price of petrol is Rs 1.2-1.25 a litre short of the imported cost.
The government had in June this year freed petrol prices, but the state firms, who control 98 per cent of the retail market, continue to informally consult the oil ministry before revising prices.
Also, the government had decided to make diesel price market-determined in stages. "Freeing diesel prices at current crude prices is simply not possible," the official said.
The three firms are projected to end the fiscal with a Rs 68,361 crore revenue loss on account of the sale of diesel, domestic LPG and kerosene below cost.
"They are losing Rs 215 crore per day on the sale of the three products. Also there are marginal under-recoveries on petrol," the official said.