The petroleum ministry has prepared a draft cabinet note on freeing petrol and diesel prices from the government control, after which they will be linked to international movements.
"The draft note is ready. It will be put to the new Petroleum Minister when it takes over next week and if he approves, it will go to the Cabinet for consideration," a top Petroleum Ministry official said.
With international crude oil prices hovering between $50 a barrel and $60 a barrel, the oil ministry feels it is the right time to free petrol and diesel prices from government control.
According to the proposal, state-run Indian Oil, Bharat Petroleum and Hindustan Petroleum will be given freedom to fix rates of petrol and diesel till the time crude oil stays below $75 a barrel. If it breaches this mark, the government will step in to protect the interests of consumers, he said.
"At current crude rates, oil companies incur a loss on petrol sales but make marginal profit on diesel. So, if pricing is freed, petrol price will go up by Rs 1.99 a litre while diesel rates will come down by Rs 0.32 a litre," he said.
