Government delays decision on fuel price hike as IOC bleeds

IOC, forced to sell fuel at a loss for years without adequate compensation,  has been forced ration fuel and stop importing diesel for domestic sales.

While prime minister Manmohan Singh has finalised details of a package to bail out state-run oil firms reeling under high international oil prices, an announcement on the price hike is expected to come only by the week-end.

The prime minister today discussed the emerging scenario with his cabinet colleagues, including external affairs minister Pranab Mukherjee, finance minister P Chidambaram, petroleum minister Murli Deora and planning commission deputy chairman Montek Singh Ahluwalia.

"We discussed the various options... hopefully, by tomorrow or by day after tomorrow, we will have a solution,'' Deora told reporters after the meeting. He, however, refused to say what the expected decision would be.

Official sources said a mix of measures, including a hike in petrol and diesel prices and a minor overhaul of duty and issue of oil bonds for fuel retailers would form part of the package.

The package is  expected to keep price hike below Rs10 a litre for petrol,  below Rs5 per litre for diesel and below Rs50 per cylinder for LPG.

"International prices touching $135 a barrel has forced down our throat Rs225,000 crore revenue loss (on sale of petrol, diesel, LPG and kerosene). Unless we act, companies will not be left with cash to import crude,'' Deora said.

While most Asian nations, including OPEC member Indonesia, have raised fuel prices as crude oil prices soared, India is yet to make a decision on fuel prices.