New Delhi, May 30: The Government will consider deregulating petrol and diesel prices, Mr Murli Deora, said on Friday after taking over as Minister of Petroleum and Natural Gas for a second term.
“The issue of deregulation is being discussed and it will be put up to the Cabinet for a decision,” he said, adding that a decision on the issue would be taken in about six weeks.
Mr Deora’s announcement met with an almost immediate response in the stock market, with the prices of oil company shares rising. On the NSE on Friday, IOC’s shares closed the day nearly 7 per cent up, BPCL 4 per cent, HPCL 8 per cent, ONGC 4 per cent, GAIL (India) 5 per cent, Cairn India 7 per cent and Reliance Industries 2 per cent. Both IOC and BPCL also announced their results today.
Earlier in the month, Oil Ministry sources had said that draft Cabinet notes have been readied for giving state-run oil marketing firms IndianOil, Bharat Petroleum and Hindustan Petroleum the freedom to fix petrol and diesel prices when crude oil rules below $75 a barrel.
Once deregulation takes place, fuel retailers will be able to fix petrol and diesel prices periodically — it could be once a fortnight or once a month. The draft note also included the proposal of raising rates of natural gas produced by ONGC and Oil India Ltd from fields given to them on a nomination basis.
RURAL LPG SCHEME
In his first interaction with the media after taking charge, Mr Deora also expressed his intention to introduce a rural LPG distributorship system in the first 100 days of the UPA Government.
“At present, 9,350 LPG agencies cover only 50 per cent of the population. We want to extend the coverage to every nook and corner. The Gramin LPG Vitrak scheme would be launched at locations with potential of up to 1,000 refills a month,” he said.
RELAUNCH NELP VIII
The Petroleum Minister said that another agenda before the Government was to consider deregulating prices of natural gas sold under the Administered Pricing Mechanism. Besides, it would focus on intensifying oil and gas exploration and re-launching the VIII New Exploration Licensing Round (NELP VIII) shortly.
“During the next 100 days road-shows will be held. But before that the issue of applicability of tax holiday to commercial production of natural gas needs to be resolved,” he said.
Earlier, the Government had deferred the auction of oil and gas blocks under NELP VIII as the issue on tax holiday for natural gas production had not been resolved.
It may be recalled that in Budget for 2008-09, the Finance Ministry had left out natural gas and defined mineral oil only as crude oil, causing some confusion.
According to the prevailing tax policy, companies engaged in commercial production of mineral oil are eligible for a 100 per cent tax break for a period of seven consecutive assessment years, including the initial year.
Commenting on domestic energy production, Mr Deora said oil production from the Rajasthan block being carried out by Cairn India and the on going gas production from Reliance Industries Ltd’s D6 block in the Krishna Godavari Basin will reduce the country’s dependence on imports to some extent and save it foreign exchange. Currently, India imports around 75 per cent of its crude oil requirement.
Mr Jitin Prasad, a member of Mr Rahul Gandhi’s youth brigade, also took over on Friday as Minister of State for Petroleum.