The panel headed by Planning Commission member B K Chaturvedi has asked Prime Minister Manmohan Singh to raise petrol prices by Rs 2.50 a litre per month till March 2009 and diesel prices by Rs 0.75 per litre till 2010 to eliminate subsidies on the two fuels.

The Committee suggested restricting LPG cylinders sold at subsidised rates to six per connection in a year and phasing it out over a three-year period.

The three-member panel, that was asked by the Prime Minister to go into the financial position of oil firms, also suggested levying a 'Metro Extra' tax of Rs 2 per litre on diesel, in four instalments in large cities, as the fuel was being used in expensive cars.

The eleven cities where the 'Metro Extra' tax would be levied are National Capital Territory of Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Kanpur, Pune, Surat and Agra.

It also suggested temporary reduction in excise duty on petrol by Rs 10 a litre from Rs 13.75.

While suggesting a Special Oil Tax on crude produced from fields awarded prior to the advent of the New Exploration Licensing Policy (NELP) in 1999, the panel disfavoured any Super Profit or Windfall Profit Tax on private refiners like Reliance Industries.