The Union government has put in motion the process of effecting a possible fuel price hike, with the Cabinet scheduled to discuss the issue on Thursday.

Petroleum and Natural Gas Minister Murli Deora held consultations with the constituents of the United Progressive Alliance (UPA) even as the Ministry forwarded the Kirit Parikh Committee’s hike proposal to the Congress Core Committee .

An experts group, headed by Mr. Parikh, a former Planning Commission member, recommended deregulating the petrol and diesel prices, while raising the kerosene and domestic LPG rates by Rs. 6 a litre and Rs. 100 a cylinder respectively.

The Cabinet will consider the panel’s proposal of total decontrol of the petrol prices and a moderate increase in the diesel, LPG and kerosene rates.

Mr. Deora met Union Communications Minister and senior DMK leader A. Raja on Wednesday morning. He also spoke over the phone with Trinamool leader and Railway Minister Mamata Banerjee, explaining the precarious situation the public sector oil marketing companies (OMCs) were in and the need for a hike.

Mr. Deora refused to comment on the talks with the UPA partners or the kind of hike proposed.

Official sources said both Mr. Raja and Ms. Banerjee were non-committal on the stand of their parties. Mr. Raja was understood to have told Mr. Deora that any decision on the issue would be taken by party leader and Tamil Nadu Chief Minister M. Karunanidhi.

Many of the UPA partners and the Left parties had strongly opposed a hike, which forced the Petroleum Ministry to give up the move to seek decontrol of the diesel prices also.

“The Union Cabinet and the Congress Core Committee will also consider a moderate hike in the LPG and kerosene prices. The hike may not be very steep. It will be in the range of around Rs. 25 a cylinder and Re. 1 a litre for diesel,” a senior official said.

Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are selling fuel at subsidy and expect a revenue loss of Rs. 46,030 crore on that account this year. Of this, the government was meeting only Rs. 12,000 crore. Petrol is now sold at a loss of Rs. 4.72 a litre, diesel at Rs. 2.33 a litre, kerosene Rs. 18.06 and domestic LPG at a discount of Rs. 287.59 a cylinder.

Any decontrol of the petrol prices at this juncture would lead to an increase of Rs. 4.72 a litre.

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