State run oil companies, who are suffering a loss of about Rs. 1 on every liter of petrol sold in the country, now believe that the government should either let them increase the price of the fuel or switch back to the regulated pricing mechanism.

The oil companies are now spending more to pay for imports in dollars and thus might have to increase the retail prices in the country. Even as the oil companies are free to determine the price, they still have to take `advise' from the petroleum ministry before announcing any changes to the retail prices in the country. The oil companies will only roll out an increase after taking the government's consent on the matter.

IOC Chairman RS Butola has said that the oil company should either increase the price or the government should start regulating the price of petrol again. The oil companies are estimated to have under-recovery from selling diesel, LPG and kerosene by selling fuel of about Rs 1.6 lakh crore.

It is believed that the government might have to compensate for about 60 percent of the total oil subsidy amounting to about Rs 96,000 crore. The government has made a provision for just Rs 40,000 crore.