Against the backdrop of ongoing surge in global crude oil prices hitting the bottom-line of state-owned Oil Marketing Companies (OMCs), the government is likely to decide if it should go for any hike in petrol and diesel prices.

In the face of unprecedented rise in international crude oil prices, the government is trying to find a solution to provide relief to oil PSUs.

“I will meet Prime Minister Manmohan Singh on this issue,” the Petroleum Minister Murli Deora told newspersons here.

The issues

After taking all issues into consideration, the government will take a decision, he said, and indicated that in case the government will opt for a hike in retail prices of petrol and diesel, it will be minimal, he said.

In view of the forthcoming assembly elections in Gujarat and Himachal Pradesh, the Congress-led United Progressive Alliance government is finding it politically risky to effect any hike in fuel prices at this juncture.

Few days back, Deora had a meeting with the Finance Minister P Chidambaram to discuss measures to cope with the record crude oil prices.

Only last month, the Congress-led United Progressive Alliance government sticking to its aam Admi (common man) plank decided not to raise fuel prices during the current fiscal despite the rise in the cost of production due to higher international crude oil prices.

Relief package

Instead, the government devised a package to take care of two-third of the Rs 55,000 crore revenue loss to public sector oil firms.

This package was calculated on the basis of the Indian basket of crude  oil price averaging at 70 dollars a barrel.
But with global crude prices threatening to reach an alarming level of 100 dollars a barrel,  the compensation is now being considered inadequate.

As per an estimate, state-owned OMCs might incur revenue loss of Rs 70,000 crore if global crude oil prices were to remain above 90 dollars for the rest of the fiscal 2007-08.