"Losses on fuel sales are mounting. The petroleum ministry is pushing for a marginal increase in petrol and diesel prices coupled with a cut in excise duty on the two fuels. I think a decision on the issue is likely to be taken after Gujarat assembly elections," a top official said.

A group of ministers on commodity pricing including fuel rates, headed by External Affairs Minister Pranab Mukherjee, is slated to have its first meeting on December 14.

Indian Oil [Get Quote], Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 69,753 crore (Rs 697.53 billion) on sale of petrol, diesel, LPG and PDS kerosene as the government has not allowed them to raise prices in line with the price of imported crude.

Petrol is being sold at a loss of Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene Rs 20.53 a litre and LPG at a loss of Rs 256.35 per cylinder.

"Continued cash losses make PSU operations non-viable, sapping their ability to generate resources for proposed investments and to service consumers," the official said.

The current price of Indian basket of crude oil is higher by around $22 a barrel over the international price prevailing at the time of last increase in petrol and diesel prices on June 6, 2006.

An increase of one rupee a litre in petrol price would cut under-recoveries by Rs 90 crore (Rs 900 million) a litre and the same on diesel would slash the loss by Rs 360 crore (Rs 3.6 billion) a month.

If the government increases kerosene price by the same amount, losses would come down by Rs 95 crore (Rs 950 million) per month and if LPG prices were raised by Rs 10 a cylinder, they would come down by Rs 58 crore (Rs 580 million) per month.

A reduction in excise duty by Re 1 per litre on petrol and diesel would reduce the under-recoveries of oil companies by Rs 1380 crore (Rs 13.80 billion) and Rs 5270 crore (Rs 52.70 billion) respectively.