The heads of three public sector oil-marketing companies -- Indian Oil [Get Quote], Hindustan Petroleum and Bharat Petroleum -- met Petroleum Minister Murli Deora on Tuesday to put across their problem of mounting losses resulting from selling petrol, diesel, LPG and kerosene at government-controlled prices.

With the rising price of crude oil, the gap between the desired selling price and the actual selling price -- referred to as under-recovery -- is up to Rs 190 crore (Rs 1.9 billion) a day. The solution is to raise retail prices, an unpopular move.

"Although we have not yet set a benchmark for revision of petrol and diesel prices, we will do something very soon," Deora said.

The price of the basket of crude oil that Indian refiners buy continues to hover around the $73 a barrel mark, just $2 short of the all-time high of $75.20 a barrel on August 8 last year.

"I have been talking to the minister on a regular basis. The mounting under-recoveries are a worry," said Sarthak Behuria, chairman and managing director, IOC, the country's largest retailer of petroleum products.

The government compensates the oil marketing companies for their retail losses through oil bonds.

The other government-owned companies such as Oil and Natural Gas Corporation, Oil India and GAIL also share a part of the overall under-recovery burden in the form of discounts. The oil marketing companies themselves bear the remaining part of the burden.

"The mounting under-recoveries are causing a strain on our working capital. This is one of the reasons why our borrowings have gone up significantly to around Rs 26,000 crore (Rs 260 billion)," another IOC official said.

Prices of petrol and diesel were last raised in June 2006 when the price of the Indian crude oil basket was at $68 a barrel.