Petrol prices are expected to rise by Rs10-20 a litre as the government is considering decontrol of fuel prices, a move that may relieve public sector oil marketing companies of the burden of subsidised sales that have cost them over Rs200,000 crore in lost revenues.

With the price of crude oil touching an all-time high of $135 a barrel in the international markets, the government is weighing plans to decontrol petrol prices while keeping some subsidies on diesel, cooking gas and kerosene.

"One of the options being considered is deregulating petrol prices," a petroleum ministry official said, adding, "The country's preferred auto fuel diesel will, however, continue to be subsidised even though a marginal Rs2-3 a litre hike in prices may be announced."

With petrol, currently being sold at a loss of Rs16.34 a litre and diesel at a loss of Rs23.49 per litre, a hike in petrol prices would mean that it will cost around Rs70 a litre in a metros like Mumbai.

Deregulating petrol price is the one option being considered after the finance ministry turned down petroleum ministry's request for withdrawing the five per cent customs duty on crude oil and that on petrol and diesel to 2.5 per cent from current 7.5 per cent.

The ministry had also sought lowering of excise duty on the two fuels but finance ministry is in no mood to oblige, the official said.

Petroleum ministry officials also content that unlike diesel, which is widely consumed by goods transporters, a rise in petrol prices will only have negligible or little impact on inflation and price deregulation would not add to the already high inflation rate.

However, deregulating petrol would lower the revenue losses of oil marketing companies by just Rs20,000 crore.

State-run oil firms, meanwhile, have raised the security deposit for new cooking gas (LPG) connections by Rs400 to Rs1,250 per cylinder.

Indian Oil, Bharat Petroleum and Hindustan Petroleum raised refundable security deposit for new connections to Rs1,250 per cylinder from Rs850 due to rise in the cost of steel, which is used as an input, an industry official said.

The security deposit in the northeast has been raised to Rs900 per cylinder from Rs500.

The cost of gas regulator has also been raised to Rs150 as against Rs100 a earlier.