Friday, September 2 2005 15:46 Hrs (IST) - World Time -

New Delhi: Petrol and diesel prices may go up by Rs 2-3 a litre and LPG by Rs 20 per cylinder next week as the Union Cabinet today (Sept 2, 2005) deliberated on the urgency to raise fuel prices, but put off a decision till the return of Petroleum Minister Mani Shankar Aiyar from his foreign tour.

"The Cabinet recognised that there was no alternative but to raise fuel prices in view of the spiralling international oil prices. But the hike will not happen just now...not until September 7," a senior Cabinet minister, who wished not to be identified, said.

Aiyar is to return on September 7 after his tour of Norway, Iceland and Bangladesh. It was not clear if the price increase would be accompanied by a cut in duties to cushion the impact of crude oil prices that crossed 70 dollars a barrel. Finance Ministry is opposed to any cut in excise duty on petrol and diesel, claiming tax revenues from oil sector have grown only 9 per cent this fiscal against a target of 15 per cent growth.

Prime Minister Manmohan Singh had at a late night meeting yesterday reviewed the pressure that spiralling oil prices were putting on the economy and the public sector oil firms. Sources said petrol was currently being under-priced by Rs 7.45 a litre and diesel by Rs 5.15 per litre. LPG was being sold at a loss of Rs 96 per cylinder and kerosene price was discounted by Rs 12.85 a litre to the cost.

Petroleum Ministry proposed raising petrol and diesel prices by Rs 3 per litre each and LPG price by Rs 20 per cylinder while also cutting excise duty on petrol and diesel by Re one per litre each.