Updated on Wednesday, July 01, 2009, 18:07 IST

Zeenews Bureau

New Delhi, July 01: In the wake of a meeting on Wednesday between the Prime Minister and Petroleum Minister Murli Deora, the govt decided to hike petrol and diesel prices by Rs 4 and Rs 2 respectively.

However, the LPG and kerosene prices were left untouched.

Petroleum Minister Murli Deora told reporters at a hurriedly convened press conference here that the new prices take effect from the midnight of Wednesday.

Addressing the press conference Petroleum Secretary R S Pandey announced that by not increasing the prices of LPG and kerosene the government will bear the total burden of Rs 30,000 crore.

"The under-recoveries (losses) have reached a level where it has become inevitable to revisit the prices," he said, adding the government will continue to monitor the global prices and take appropriate decisions.

Deora, along with his deputy Jitin Prasad, parried the question whether the prices would come down again if the same decreases at the international level.

Provisions would be made in the budget, to be presented on July six, to cover the loss on account of LPG and kerosene, Deora said.

He said that we have done enough for common people and in future also we would see what could be done for them.

The decision to increase the price was taken after Deora met Prime Minister Manmohan Singh today.

The govt has been considering raising prices as petrol companies have been suffering heavy losses due to the rising price on crude in international market. Crude, which had sunk to $35 level earlier, is now hovering around $70 mark.

Deora said even in the case of petrol and diesel, oil-marketing companies will continue to incur a loss of Rs.2 per litre and Rs.1.62 on petrol and diesel, respectively, on account of selling these fuels below cost.

The government had been mulling decontrolling petrol and diesel prices for some months but may have lost the window as the move would have resulted in steep rise in fuel prices. Freeing of fuel prices was ideal when crude had fallen to below USD 35 a barrel in December 2008.

Oil firms lose Rs 170 crore per day

Public sector oil firms have seen losses on fuel sale widening to about Rs 170 crore per day on firming international oil prices and may end the fiscal with over Rs 49,000 crore in revenue loss. Indian Oil, Bharat Petroleum and Hindustan Petroleum have seen losses on sale of petrol, diesel, domestic LPG and kerosene inflating from Rs 130 crore to about Rs 170 crore per day, an industry official said. The three firms are losing Rs 96.98 per 14.2-kg LPG cylinder and Rs 16.01 on every litre of kerosene. "Government has to urgently device a means to tackle these losses. The options can be a combination of a marginal price increase in petrol and diesel, issue of Government bonds and contribution by upstream firms like ONGC," he said.

Veg prices may soar

Transporters are likely to raise freight rates tomorrow after today's hike in diesel and petrol rates, a move traders said would increase prices of fruits and vegetables.

"We will meet tomorrow to take stocks of the situation," All India Motor Transport Congress senior official Deepak Sachdeva told agencies.

Asked if freight rates will rise, he said, "We are forced to increase the price. But a decision will be taken tomorrow by the association."

Potato and Onion Merchant Association (Azadpur) President Trilok Chand Sharma said, "The rise in the prices of fruits and vegetables depend upon the freight rates. Usually, hike in freight rates by transporters exceeds the proportion of increase in fuel prices by the government. I expect vegetable rates to go up."