An Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, is likely to meet on May 21 to decide on freeing petrol and diesel prices from government control.
The ministerial panel will also decide on ways to deal with the revenue lost on selling domestic liquefied petroleum gas and public distribution system kerosene below cost, an official in know of the development said.
"The EGoM meeting has been tentatively scheduled for May 21. There are availability issues about one or two ministers on that day and if they are unable to make it on that day, the meeting may be postponed," he said.
Besides Mukherjee, the EGoM also includes Petroleum Minister Murli Deora, Agriculture Minister Sharad Pawar, Chemical and Fertiliser Minister M K Alagiri, Railway Minister Mamata Banerjee, Road Transport Minister Kamal Nath and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
According to the terms of reference (ToR), the EGoM is to consider a pricing policy for petrol and diesel, including decontrol, he said, adding that it also has to decide on ways to bridge the deficit between imported cost and retail price of LPG and kerosene through a marginal price hike.
For petrol and diesel prices to be freed from government control, rates would have to be raised by over Rs 6 a litre.
Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum currently lose Rs 272.5 crore (Rs 2.725 billion) a day by selling fuel below cost. They may end the fiscal with a Rs 90,150-crore (Rs 901.50 billion) revenue loss.
They currently sell petrol at a loss of Rs 6.63 a litre while the loss is Rs 6.25 per litre on diesel, Rs 19.74 per litre on PDS kerosene and Rs 254.37 per 14.2-kg LPG cylinder.
Industry sources said the EGoM may decide to free just the petrol price for now and approve a marginal increase in diesel and LPG rates, they said.
The official said the three firms had lost Rs 46,051 crore (Rs 460.51 billion) on selling petrol, diesel, domestic LPG and PDS kerosene below imported cost in 2009-10.
Of this, Rs 14,430 crore (Rs 144.30 billion) was the loss on petrol and diesel, which is entirely being met by upstream firms like ONGC and OIL.
To partly cover the Rs 31,621-crore (Rs 316.21 billion) loss on LPG and kerosene, the finance ministry has agreed to give Rs 26,000 crore (Rs 260 billion). The issue of the remaining Rs 5,621 crore (Rs 56.21 billion) would also have to be decided by the EGoM, he said.
