Diesel likely to go up by Rs2-3 a litre

Prime Minister Manmohan Singh said on Monday that diesel prices, along with those of LPG and kerosene, must be raised to bring them more in line with international prices.

"Energy remains under-priced in our country, with coal, petroleum products and natural gas prices well below international prices. To meet our target of rapid, inclusive and sustainable growth we must undertake a phased rationalisation of energy prices to bring them in line with world prices," the prime minister said while inaugurating BPCL-Kochi Refinery's integrated refinery expansion project at Ambalamugal near Delhi.

Based on the recommendations of the Vijay Kelkar Committee report which the petroleum ministry is currently studying, most reports suggest that diesel prices will be hiked by Rs2-3 a litre, while cooking gas could go up by Rs50-75 a cylinder.

The Prime Minister noted that the country was dependent on imports to meet a major portion of its crude oil requirements, and said large-scale investment was required for exploration of oil and gas within the country as also acquisition of overseas assets in the sector, along with strengthening the marketing and distribution infrastructure.

The government was committed to encouraging companies to undertake domestic exploration for oil and gas and the public sector companies were also looking at opportunities abroad. The BPCL had made some significant successes in the upstream exploration and production sector, particularly in Mozambique and Brazil, he said.

The Kelkar Committee, which was appointed by the finance ministry to suggest a roadmap for fiscal consolidation, has suggested an immediate hike in fuel prices and complete deregulation of diesel prices by start of 2014-15 fiscal. It also suggested raising kerosene and LPG prices.