The ministry is preparing a draft note for consideration of the CCPA on pricing of diesel, kerosene and LPG, official sources said here.
Endorsing the previous UPA government's monthly 40-50 paisa per litre increase in diesel prices, the ministry is likely to propose that the monthly revisions may continue till the present Rs 3.40 a litre loss on the fuel is fully bridged.
After the diesel subsidy is eliminated during the course of the year, the ministry wants CCPA to authorise it to decontrol or free price of diesel as was done in case of petrol in June 2010.
Since its decontrol, petrol rates are revised on 1st and 16th of very month based on average cost in the previous fortnight. Barring a few exceptions, petrol prices have moved in tandem with cost since then.
Sources said the ministry wants the CCPA to consider recommendations of an expert panel headed by former Planning Commission member Kirit S Parikh.
The committee had in October last year recommended to the government that diesel prices should be hiked by Rs 5 per litre, kerosene by Rs 4 a litre and domestic LPG rates by Rs 250 per cylinder immediately to cut fuel subsidy bill by Rs 72,000 crore.
But as the monthly increases have led under-recoveries, or the difference between cost and retail price, falling below Rs 5, the ministry is unlikely to press for implementation of the panel's recommendation on diesel.
Besides diesel, state-owned oil firms at present lose Rs 33.07 a litre on kerosene sold through the public distribution system (PDS) and Rs 449.17 on LPG, they said.