The rate change may, however, need a political clearance as assembly elections in five crucial states, including Uttar Pradesh and Punjab, have been announced.
"While international price of gasoline (against which domestic petrol prices are bench marked) are more or less at the same level (as at the time of last revision), the rupee has depreciated to about Rs 52.70 to a US dollar," a top official said.
The domestic rates, which were last revised on November 30, are pegged at Rs 51.50 to a US dollar exchange rate.
The average exchange rate in first fortnight of December was Rs 51.98 to a US dollar, which has further deteriorated.
State-owned oil companies like Indian Oil Corp (IOC) use fortnightly average of benchmark oil price and exchange rate to revise retail rates on 1st and 16th of every month.
The next review is due on December 31 and if the oil companies decide to pass on the exchange rate fluctuations to consumers, the new rates would be effective from January 1.
"There is an under-recovery of about 85 paise (Rs 0.85) per litre currently. After adding local sales tax, the desired increase in retail prices would be Rs 1.02 per litre," the official said.
The government continues to control rates of diesel, domestic LPG and kerosene which were sold way below cost to keep inflation under check. The oil firms lose Rs 12.95 per litre on diesel, Rs 29.99 a litre on kerosene and Rs 287 per 14.2-kg LPG cylinder.
The oil firms had in November cut petrol prices twice on drop in international oil rates. The companies reduced petrol prices by Rs 2.22 per litre, or 3.2 per cent, from November 16, followed by a Rs 0.78 per litre cut from December 1.
PTI
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