"Price increase is inevitable. But date and time, nobody can say," a top Oil Ministry source said.
Diesel prices have not been raised since June 25 last year, and state-owned oil firms sell the fuel at a loss of Rs 10.33 a litre.
"It (price increase) is on the radar for sometime now," the source, said refusing to say when the diesel rates would be increased. Asked if diesel prices can be increased after the July 19 Presidential election, the source said, "it is your guess".
Though a high-powered ministerial panel had in June 2010 decided in-principle to deregulate diesel prices, the nation's most consumed fuel continues to be tightly controlled by the government.
The Empowered Group of Ministers (EGoM), which is authorised to decide on diesel pricing, has not met since June 25, 2011. The panel was previously headed by Pranab Mukherjee, who last month resigned as Finance Minister to contest the July 19 Presidential poll.
The EGoM has so far not been reconstituted and it is not clear who will head it after Mukherjee's exit. The panel has representatives of ruling UPA's allies like Trinamool Congress and DMK.
The source said state-owned oil firms are unlikely to change petrol prices in next few days as rupee and international oil rates continue to be highly volatile.
"Oil marketing companies are not losing any money on petrol right now. But we have to wait and watch for sometime," he said.