The Group of Ministers' meeting on fuel prices on Thursday remained inconclusive. GoM will meet again to make the final decision.

The GoM deliberated on four sets of options for fuel price hike coupled with duty restructuring to limit the impact of rising global crude oil prices on state-run oil marketing firms.

The Petroleum Ministry presented to the Group, headed by External Affairs Minister Pranab Mukherjee, the options of raising petrol price by Rs 4 or Rs 2 a litre and diesel by either Rs 2 or Re 1 per litre, together with Rs 50 per 14.5-kg cylinder LPG price increase, but with no raise in PDS Kerosene prices, official sources said.

However, the proposed hike in LPG price was moderated to Rs 20 per cylinder owing to sensitivity attached to the cooking fuel.

Sources said the maximum hike in petrol and diesel is to come with a 2.5 per cent cut in customs duty on crude oil and petroleum products and a Re one a litre excise duty reduction on petrol and diesel.

The other option was a 5 per cent cut in customs duty on crude oil and petroleum products coupled with a Re one a litre excise duty drop on petrol and diesel.

Two other options that combined the two rates for auto fuel price hikes with a Re one a litre increase in PDS kerosene price were dropped as the government did not want to hurt the common man.

Before the GoM meeting, Indian Oil [Get Quote] Corp Chairman Sarthak Behuria said his company was losing Rs 170 crore (Rs 1.7 billion) a day on sale of fuel due to non-revision in prices in line with rise in international cost.

State firms currently lose Rs 10.6 a litre on petrol, Rs 11.6 per litre on diesel, Rs 331.4 per LPG cylinder and Rs 19.89 a litre on PDS kerosene.

Indian Oil, Hindustan Petroleum and Bharat Petroleum together are projected to lose Rs 71,808 crore (Rs 718.08 billion) on fuel sale in fiscal 2007-08 if prices and duties are not revised, the oil ministry told the GoM, whose recommendations will be vetted by the Cabinet.

"The Cabinet may meet in a day or two depending on the urgency of the decision," Petroleum Secretary M S Srinivasan said before going for the GoM meet. Sources said ad valorem duty rates on crude oil and petroleum products had resulted in a windfall rise in revenues for the Centre as well as state governments due to the rise in price and quantity imported this year.

A 5 per cent cut in customs duty on crude oil and petroleum products and a Re 1 per litre reduction in excise duty on petrol and diesel would result in Rs 15,530 crore (Rs 155.3 billion) annual reduction in revenues for the central government.

Petrol and diesel prices were last raised in June 2006 when crude oil was at 67 dollars a barrel. It is at 92 dollars per barrel this year. LPG prices were last raised by Rs 20 per cylinder in November 2004, when crude was at 34 dollars a barrel. Kerosene prices have not been changed since 2002, when crude was at 23 dollars per barrel.

Sources said during April-September, oil bonds worth Rs 11,257 crore (Rs 112.57 billion) were issued to the oil companies and Rs 8,788 crore (Rs 87.88 billion) assistance was received from upstream companies like ONGC [Get Quote] and GAIL.

A Re one per litre increase in petrol price would give Rs 90 crore (Rs 900 million) a month additional revenue to public sector oil companies. A similar hike in diesel and kerosene would fetch Rs 360 crore (Rs 3.6 billion) a month and Rs 95 crore (Rs 950 million) respectively.

A Rs 10 per cylinder increase in LPG prices would result in Rs 58 crore (Rs 580 million) additional revenues every month.