Oil prices need to be `rationalised', says PM

Confirming economists' expectations that a partial decontrol of diesel, gas and kerosene is in the offing, Prime Minister Manmohan Singh acknowledged today that a rationalisation of fuel prices is much needed.

Speaking after 'dedicating' the just-opened $4-billion Guru Gobind Singh Refinery at Bhatinda in Punjab, the prime minister said in his native Punjabi tongue, ''The challenges we face on the energy front are formidable. We need adequate supplies of energy at affordable prices. Domestic sources of crude oil and gas are inadequate to meet the growing demands of our rapidly expanding economy.''

The prime minister pointed out what is obvious to most economists - imports account for about 80 per cent of India's crude oil supply; and the spiralling prices of crude oil in the international market have put a severe strain on the import bill.

At the same time, he said the public should be insulated from the impact of rising oil prices.

''We need to take steps to conserve our scarce energy resources. There is no room for inefficient and wasteful use of fuel - be it petrol, diesel, kerosene, or gas,'' he said.

Petroleum minister, S Jaipal Reddy, who was also present, said that India is becoming a refinery hub, with the country's refining capacity having grown from a meagre 0.25 million tonne per annum at the time of independence to 213 million tonne per annum today. But the country's fuel needs are rapidly rising and the oil import bill breached the $100 billion mark in 2010-11, he said.

Currently, the oil companies are selling petrol at almost Rs8 a litre below cost; diesel at Rs15 a litre below cost, kerosene below Rs32 a litre and cooking gas (LPG) at a Rs550 discount per cylinder.