The Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, may meet at 1300 hours on Friday, a source said in New Delhi.
A hike of Rs. 2-3 per litre in diesel prices and an increase of at least Rs. 25 per domestic LPG cylinder are on the EGoM agenda. It may also consider raising kerosene prices.
Besides, the high powered panel may consider lowering customs or import duty on crude oil to nill from current 5 per cent, and on diesel from 7.5 per cent to 2.5 per cent.
The oil ministry is pushing for equitable sharing of the burden arising from the rise in crude oil prices among consumers, the government and state-owned companies, the source said.
State-owned oil companies now lose Rs. 15.44 per litre on sale of diesel.
One-third of this will have to be passed on to consumers in stages, while a similar amount will have to be borne by the government by way of either providing a cash subsidy or cutting customs and excise duty. The remaining would be absorbed by upstream firms like ONGC and the fuel retailers.
A similar formula would apply to the Rs. 27.47 per litre loss on kerosene and Rs. 381.14 under-realisation on sale of every 14.2-kg domestic LPG cylinder.
The source said the ministry also wants a cut in Rs. 4.60 per litre central excise duty levied on diesel to moderate the impact of high crude oil prices.
With inflation at an uncomfortable nine per cent, the attempt will be to keep the hike in retail prices of diesel to the bare minimum, the source said.
Without price hike and duty cuts, Indian Oil, Hindustan Petroleum and Bharat Petroleum are together projected to lose Rs. 1,66,712 crore in revenues on selling diesel, domestic LPG and kerosene at government-controlled rates, which are way below the market price.
Oil companies, which last month hiked petrol prices by a steep Rs. 5 per litre, are losing Rs. 1.98 a litre on the commodity which was freed from government control in June 2010.
Oil Minister S Jaipal Reddy has held meetings with Prime Minister Manmohan Singh and Mr. Mukherjee on early convening of a meeting of the EGoM, which is the decision-making body on fuel price revisions.
The EGoM has not met since June last year even though crude oil prices have spiralled upward by over 50 per cent since then.
The basket of crude that India buys was worth around $ 70-72 per barrel in June last year, but the same averages $ 111.54 a barrel in June this year.
The official said IOC, BPCL and HPCL at present lose about Rs. 490 crore per day on fuel sales.
The official said IOC, BPCL and HPCL are virtually living off borrowed money as current realisation on fuel sales is not sufficient to meet the cost of importing crude oil.
The EGoM was originally scheduled to meet on May 11, but was postponed at the last moment. There was talk of an EGoM -- which comprises representatives of all major allies in the ruling UPA -- meeting on June 9, but the meet was never scheduled for that day.