May 27 (Bloomberg) -- India's government may take a decision on raising gasoline and diesel prices next week, Oil Minister Murli Deora said.

The government will try and avoid increasing the prices of kerosene and liquefied petroleum gas, used for cooking, Deora told reporters in Mumbai today.

``In view of the fact of high oil prices, we have no other choice but to increase the prices of some of the products,'' Deora said. ``We will make all efforts to increase prices in a way that it will not hurt the poor and the increase will be as minimum as possible.''

Prime Minister Manmohan Singh's government limited fuel cost increases to 15 percent in the past year, as global crude prices climbed 45 percent, to control inflation and keep an election pledge to protect the poor. Communist parties, whose support is critical for the survival of Singh's government, wants to keep fuels affordable by maintaining the cap on prices.

The government may announce a package by May 29 that includes raising prices, lowering duties and issuing bonds to state-run refiners for selling fuels below cost, an official who declined to be identified, said on May 25.

The communist allies of the ruling federal coalition opposed any increase in retail prices at a meeting with Deora on May 10, saying the government should share the burden without passing it on to the people by cutting duties.

Losses

State-run refiners, including Indian Oil Corp., may lose 750 billion rupees ($16.4 billion) in revenue this year if the government maintains a cap on fuel prices, M.S. Srinivasan, secretary to India's oil ministry, said on May 3.

The price freeze led to Indian Oil, the nation's largest refiner, and its state-run competitors Hindustan Petroleum Corp. and Bharat Petroleum Corp. reporting losses in the quarter ended Dec. 31.

The state-run refiners reported profits for the quarter ended March 31 after the government gave them bonds worth 115 billion rupees to partly compensate for losses incurred in selling fuels below cost. The refiners lost 400 billion rupees revenue in the year ended March 31 due to the price freeze.

Crude oil prices in New York rose to a record $75.35 on April 21 and April 24 on concern Iran's refusal to halt nuclear research would prompt international sanctions and lead to a cut in supplies. Oil prices have risen 17 percent this year.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: May 27, 2006 03:37 EDT