Petroleum Minister Murli Deora has said that the government is trying to retain the oil prices at current level. He said that the government is trying its best not to raise the prices of petroleum products.

Deora is expected to meet Finance Minister Pranab Mukherjee tomorrow to discuss the subsidy for public sector oil marketing companies. A report from the Kirit Parikh committee is expected this week and the pricing is to be discussed after that. The report is largely expected to recommend deregulation of petrol prices and some freedom on diesel prices.

The petroleum ministry as asked Rs 19,000 crore more subsidy for the ailing oil firms to fully compensate loss on sale of LPG and kerosene. The estimated under-recoveries were at Rs 43,000-crore for three government companies Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum during 2009-10, out of which Rs 31,000 crore is for LPG and kerosene. The finance ministry has already committed to Rs 12,000-crore cash subsidy this year.

Deora said, "The government is very worried about the price rise. If hypothetically, there was an increase in diesel of Rs 2, then it will have a cascading effect on commodities."

The petroleum ministry said that it will ensure that the OMC's do not suffer losses due to under-recoveries. The losses arising from the sale of auto fuels are to be compensated by upstream firms like Oil and Natural Gas Corporation, Oil India and GAIL India. Together they have pooled in Rs 8,000 crore in discounts to the three companies.

Deora also indicated that these upstream companies could be asked to shell out more if the government compensation does not cover the whole loss.