| NEW DELHI (Reuters) - A panel of ministers asked to look into commodity pricing and due to meet for the first time on Friday may recommend raising retail prices of petrol and diesel, a senior official said.
Ministers could also suggest changes in tax and duty regimes for the two fuels, Oil Secretary M.S. Srinivasan said on Monday.
A surge in global crude oil prices has left state-run oil companies losing millions of dollars a day as they have to sell fuel at cheap rates to fight inflation and protect the poor.
Srinivasan added, however, that a decision was unlikely to emerge from the panel’s first round of talks on Dec. 14. It will be headed by External Affairs Minister Pranab Mukherjee.
“It should be a set of measures, including bonds, upstream share, what amount will be absorbed by oil marketing companies, duty adjustments and price hike,” Srinivasan said of a possible package.
The government issues bonds to state refiners and fuel retailers to the tune of 42.7 percent of their revenue losses due to product sales, while upstream firms share 33 percent.
Any formula would need the approval of the full cabinet.
Elections which start this week in the key state of Gujarat have been weighing on ministers’ minds as they consider possible fuel price hikes. Once those elections are over, the union government may find it easier to take a decision.
The panel was formed by Prime Minister Manmohan Singh in mid-November and asked to report back within a month.
Oil Minister Murli Deora and colleagues at the finance ministry discussed ways to stem losses at fuel firms as oil roared to near $100, and have considered a politically risky price increase.
Crude has eased in recent days and on Monday was trading at just below $88.
India has not raised retail fuel prices this year even though crude has jumped to a series of record highs.
Its crude basket has risen by 145 percent since April 2004, but retail prices of petrol have gone up by just 29 percent and those of diesel by 40 percent.
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