"There are various austerity ideas that have been floated. Shutting petrol pumps during the night is one of them. But we have not decided. It is just a proposal," Mr Moily said, urging people to save fuel by using their vehicles sparingly.
The Oil Ministry plans to launch a six-week fuel conservation drive from September 16.
"We need to reduce consumption and bring down our imports. Otherwise petrol prices will keep going up and rupee will keep falling," Mr Moily told NDTV today.
The Centre is under pressure to cut down fuel bill that stood at a whopping 144.2 billion US dollars last year. The Oil Ministry estimates it will save 20 billion US dollars and help reduce India's fuel import bill by rationing fuel supply across the cities.
"Every time the value of rupee to a dollar falls by a rupee, the import bill goes up by Rs 7900 crores. Oil companies are losing over 10 rupees for every litre of diesel and about 33 rupees per litre of kerosene," Mr Moily said.
The Oil Ministry estimates that, at current levels, the losses of the oil companies will mount to Rs 1 lakh 80,000 crores.
Mr Moily also wrote to Prime Minister Manmohan Singh and Finance Minister P Chidambaram today seeking a steeper fuel price hike. On Saturday, state-run oil firms had hiked petrol and diesel prices by Rs. 2.35 and 50 paise per litre respectively (without taxes).
Opposition Bharatiya Janata Party (BJP) reacted sharply to the government's quick-fix solution. Party spokesperson Shahnawaz Hussain said, "Let alone a petrol pump, this government plans to shut down the country."