Indian Oil Corporation, the country's largest oil retailing firm, is seeking an increase of Rs 4 per litre and Rs 5 per litre in prices of petrol and diesel to recoup the Rs 489 crore (Rs 4.89 billion) loss it incurred in January-May for not raising fuel prices despite rise in international prices.

The economic reasoning for the small rise is that the sharp jump in international crude oil price since last month has eroded the over-recoveries from petrol and diesel to subsidise LPG and kerosene. Petrol and diesel prices were last revised on January 1, 2004 and since then crude oil prices have jumped by over $6 a barrel.

"We are selling petrol and diesel at below the cost. We are incurring losses on selling the two fuels," IOC chairman M S Ramachandran told reporters in New Delhi.

He, however, did not indicate that the hike in petrol and diesel prices was likely at the next review on May 31, saying any decision on increasing prices will be taken in consultation with the new government.

IOC and its subsidiary lost Rs 188 crore (Rs 1.88 billion) in January-March and Rs 301 crore (Rs 3.01 billion) in the subsequent two months as crude prices jumped to a two-decade high, but domestic fuel prices were kept artificially low due to the elections.

Ramachandran said IOC, along with other state-run firms, Hindustan Petroleum Corp and Bharat Petroleum Corp, suffered a Rs 4337.55 crore (Rs 43.37 billion) loss on sale of LPG and kerosene mainly due to unchanged prices of the two products in the last two years and reduction in budgetary support to one-third from April 2004.