Government to ensure affordability while deregulating fuel prices: Pandey

10 June 2009

The government will ensure affordability of petroleum fuels even as it is committed to deregulation in pricing, petroleum secretary RS Pandey said today.

Pandey said officials from the petroleum and finance ministries will meet to discuss budget proposals on 15 June and that his ministry proposes to seek tax breaks on natural gas production.

"Deregulation is an inter-ministerial issue. The government is committed to reforms and we have to make sure that people get fuel at affordable rates," he said after a meeting with the Petroleum and Natural Gas Regulatory Board (PNGRB).

The new UPA government under Manmohan Singh is committed to freeing fuel prices from administrative controls and plans to eliminate diesel and gasoline subsidies as soon as July.

The government compensates state refiners such as Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, by issuing oil bonds and supplying domestic crude oil at a discount.

Reliance Industries, which began producing natural gas from its deep-sea fields off the east coast this year, had raised production to 26 million metric standard cubic meters a day (mmscmd), and is expected to raise it to 40 mmscmd in 15-20 days, Pandey said.