The Indian government will hike the prices of diesel and petrol by January 2008, and this will help public oil firms to minimize loss they are incurring on selling fuel below cost, said Petroleum Minister.

M.S. Srinivasan, Union Minister of Petroleum and Natural Gas said, "We are definitely not ruling out the hike. There will be a hike, so be prepared for moderate hike in the prices of petrol and diesel.”

He further said that the increase would be minimal, and the hike has been necessitated by the increase in the global crude oil price, which is inching towards a 100-dollar per barrel mark.

Sources said, the increase will be up to Rs. 2 - 3 per litre of diesel and petrol.

Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 69,753 crore on sale of petrol, diesel, LPG and PDS kerosene as the government has not allowed them to raise prices in line with the price of imported crude. The government had last increased petrol and diesel prices on June 6, 2006.

The Group of Ministers, headed by External Affairs Minister Pranab Mukherjee, will take a final decision on the price hike at a meeting next month.