With the general elections around the corner, the government seems to be in no hurry to impose a dual cess on diesel to fund the further expansion of rural roads and finance the creation of strategic reserves of oil.

While it has been proposed that a cess of 50 paise a litre be imposed on diesel for rural roads, the government is learnt to be planning a cess of 15 paise a litre each on diesel and petrol for oil reserves.

"At this juncture, it looks difficult that the government will take the unpopular step of increasing diesel prices, which will have a spiralling impact on the economy. It is likely that the idea of a cess on diesel to fund rural roads has been floated by the surface transport ministry in view of its highly popular highway project, but it has not progressed beyond that," a bureaucrat told Business Standard.

Even Petroleum Minister Ram Naik said the proposal had not reached his ministry. "I have not seen it so far," he said.

Although the Cabinet had recently approved the scheme for the creation of strategic reserves of oil, it is quite likely that the government will postpone the imposition of 15 paise cess on petrol and diesel for funding the project till the elections are over.

The government has already "sounded" oil marketing companies that though international prices of diesel and petrol are going up, they should not hike the retail prices ahead of the elections.

The government is hopeful that the international prices of oil, which have been moving up for the past two months, will soften soon as winter comes to an end in the West and supplies from war-torn Iraq pick up shortly.

It is also expected that the Organisation of Petroleum Exporting Countries may increase crude oil production in view of the abnormally high prices.