India budget may unveil fuel price reform - report

MUMBAI, June 26 (Reuters) - The Indian government may unveil a roadmap in its July 6 budget to deregulate fuel pricing and give leeway to state-run oil refiners to fix petrol and diesel prices within a band, the Economic Times reported on Friday.

Refiners such as Hindustan Petroleum Corp (HPCL.BO), Indian Oil Corp (IOC.BO) and Bharat Petroleum Corp (BPCL.BO) will probably be allowed to raise retail auto fuel prices by up to 15-20 percent in one go, the newspaper said, citing an unnamed government official involved in the decision-making process.

The frequency of price changes will likely be limited to once in two weeks, and if the world oil prices rose above $75 a barrel the government will step in to protect consumers, the paper said.

If the reform proposals are approved prices of petrol could rise by 5.1 rupees (10 cents) a litre and diesel by 2.6 rupees a litre, it said.

Prices of petrol, diesel, cooking gas and kerosene sold by state firms are currently fixed by the government to control inflation and help poor and middle-class households. The government partly subsidises the losses for state-run companies.

After the ruling coalition was re-elected in May with a stronger mandate, Oil Minister Murli Deora had said the government was considering a proposal to free state controls on transport fuel prices.

The government will continue to fix prices of cooking fuels such as liquefied petroleum gas and kerosene, which is sold through state-owned shops, the paper said. ($1 = 48.5 rupees) (Reporting by Ami Shah; Editing by Ranjit Gangadharan)