The union cabinet is likely to consider a proposal next week to raise the petrol price by Rs 2.80 per litre and the diesel price by about Rs 2 per litre.Petrol prices have to be raised by about Rs 5 per litre and diesel by about Rs 4.30 per litre due to the Indian basket of crude touching a historic high of over $51 per barrel."The hike is being proposed to be effected in two stages. The first on April 1 and the second on May 1," a top government official said.IOC, BPCL and HPCL have sought Rs 3.50 per litre and Rs 2.80 a litre hike in petrol and diesel prices, respectively, the official said."Besides, they also want Rs 1.50 per litre increase in the two fuel prices commensurate with the investments they have made for producing ultra low sulphur Euro III-grade petrol and diesel for 11 major cities and Euro II auto fuel for the rest of the country from April 1," the official added.The oil companies are investing over Rs 40,000 crore for upgrading fuel quality.IOC, which controls half the oil market, will lose Rs 250 crore on selling petrol and diesel below the cost in the second fortnight of March. For the full month, the loss is pegged at Rs 400 crore, the official said.The official said the raise sought by the oil companies was besides the Rs 2.85 per litre increase in petrol and Re 1 per litre hike in diesel price necessiated by the Budget 2005-06 proposal to raise exise duty on the two fuels."Not passing on the increased incidence of excise duty would result in around Rs 264 crore (about Rs 106 crore on petrol and Rs 158 crore on diesel) loss to them every fortnight," he said.
