The petroleum ministry has signaled that besides freeing fuel pricing from administrative control, the government on Thursday may cut petrol, diesel and domestic LPG prices.

According to an official working in the petroleum ministry, the Cabinet, which is planed to meet on Thursday, may reduce petrol price by Rs 5 a litre, diesel by Rs 3 per litre and domestic LPG by Rs 25 per cylinder, thus, giving relief to the common man and further easing inflationary pressures.

It may be here recalled that the government in April 2002 freed petrol and diesel prices from administrative control, following which the state retailers altered prices every fortnight corresponding to adjustments in costs.

Presently, public oil companies are making Rs 9.70 per litre profit on sale of petrol, Rs 3.70 per litre on diesel, but are loosing Rs 31.70 per LPG cylinder and Rs 11.69 on every litre of kerosene.

The official added, “There is also a proposal for freeing the retail fuel prices from administrative control after a mechanism to compensate for the losses on LPG and kerosene is devised.”

The government is also trying to clear up added revenues by raising excise duty on petrol and diesel by a minimum of Rs 1 per litre.

It is also learnt that for losses on LPG and kerosene, the administration may issue a Rs 30,000-crore extra oil bonds during this year.

The government has slashed petrol price by Rs 5 a litre and diesel by Rs 2 per litre announced earlier this month and this was only an temporary measure as the government was desperate to check how global oil costs act in short-to-medium term add sources.

In July 2008, the crude oil price climbed up to a record high of $147 per barrel.