Prime Minister Manmohan Singh may deliberate on freeing auto fuel prices when he reviews the financial health of state-run oil firms with Finance Minister Pranab Mukherjee and Oil Minister Murli Deora on January 13.

Planning Commission Deputy Chairman Montek Singh Ahluwalia and former Planning Commission member Kirit S. Parikh, who heads an expert committee on fuel pricing, may join the deliberations, official sources said.

Officially the meeting has been called to take stock of the petroleum sector, especially the financial position of PSU oil retailers, sources said.

The issue of freeing petrol and diesel prices from the Government control may come up for discussion as Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose. Rs 45,000 crore on selling the two auto fuel and domestic LPG and kerosene at rates below cost during the current fiscal.

Sources said the Government had failed to provide the promised oil bonds to make up for the revenue loss on LPG and kerosene, in the absence of which HPCL and BPCL reported losses in Q2 while IOC barely scrapped through.

Besides the three, private fuel retailers Reliance Industries, Essar Oil and Shell have also sought freeing of petrol and diesel prices to given them level playing field.

Freeing of auto fuel prices would result in petrol prices being raised by Rs. 3.49 a litre and diesel by Rs. 2.38 per litre.

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