The government is fixing the losses that each oil company will have to bear in this financial year on domestic liquefied petroleum gas and kerosene sold through the public distribution system.

"We should be able to tell all the companies within a week their share of the under-recoveries on account of the sale of domestic LPG and PDS kerosene. The details of the scheme are being worked out," Petroleum secretary BK Chaturvedi told Business Standard.

Chaturvedi said in the absence of an oil pool account, companies like Oil and Natural Gas Corporation and Gas Authority of India Ltd would be told to sell their crude or LPG to oil marketing companies at a discount.

This, according to Chaturvedi, is the only way that the upstream oil companies can be made to share the under-recoveries.

Chaturvedi denied that marketing margins on the sale of petrol and diesel by public sector marketing companies have been frozen to mop up a part of the resources to meet the subsidy bill for the two cooking fuels. "The government has not frozen the marketing margins of any company," he said.

The petroleum secretary said the government had not been fixing the prices of diesel, petrol or any other petroleum product after the dismantling of the administered pricing mechanism in the oil sector.

"Oil companies have the flexibility to fix the marketing margins and retail prices in accordance with their market-related pricing concept. It is for them to decide how they will internally adjust the impact of the government's decision on sharing of the LPG and kerosene subsidy," he said.

Chaturvedi said at present oil marketing companies were losing around Rs 100 a cylinder on the sale of domestic LPG and Rs 3 a litre on PDS kerosene.