An empowered group of ministers (eGoM) will again meet in ten days to deliberate

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on proposal to allow free pricing of petrol and diesel. The panel failed to arrive at a consensus on Monday.

The eGoM headed by finance minister Pranab Mukherjee met on Monday to discuss recommendations made by Kirit Parikh-lead panel in February this year. Parikh committee recommended freeing prices of petrol and diesel from government control and hike in retail rates of domestic cooking gas and kerosene.

Four key ministers including Trinamool Congress chief and railway minister Mamata Banerjee and NCP supremo Sharad Pawar were not present at the meeting. Roads minister Kamal Nath and power minister Sushilkumar Shinde also didn’t come for a discussion on this vital issue that has political implications.

“The eGoM came to the conclusion that further discussions would be necessary before views are firmed up,” government said in a statement. The possible inflationary impact of rise in the prices of petroleum products was also discussed.

A decision to free fuel prices will help to strengthen financial health of oil marketing companies (OMCs) and enable the government to cut its fiscal deficit. But, the politically sensitive decision may weigh heavy for Congress as several state elections are scheduled later this year and 2011-12. Deora earlier in the day told reporters that it is necessary to hike fuel prices as retailing oil firms were suffering losses.

The ministerial panel also noted that under-recoveries suffered by OMCs on account of the present price structure and the burden faced by the government for the under-recoveries during 2003-04 to 2009-10 was in excess of Rs 3,45,000 crore.

At present, country’s three government-run fuel retailers sell petrol, diesel, cooking gas and kerosene below market price. Freeing petrol and diesel prices from government control will result in an increase of price by more than Rs three per litre.

The UPA government had already set the ball rolling on price-hike issue with Congress leadership consulting their main allies in the past few months. But allies, DMK and Trinamool Congress, are against any increase in prices. The centre is already under attack from opposition parties over high food prices.

B M Bansal, chairman of Indian Oil Corporation (IOC), the country’s biggest state-owned retailer, said he is still hopeful the government will scrap fuel price controls as daily losses from selling the fuels below cost is nearly Rs 110 crores.