After DBTL, kerosene subsidy reforms is next focus area: Dharmendra Pradhan

Interview with Minister of Petroleum and Natural Gas

After diesel deregulation, a new gas price formula and roll out of the Direct Benefits Transfer in cooking gas, the next stage of development in the oil sector would focus on kerosene subsidy reforms, Petroleum Minister Dharmendra Pradhan tells Sudheer Pal Singh in an interview. Edited excerpts:

What is keeping you busy these days?

The Prime Minister has given us an ambitious and futuristic target of reducing India's import dependence by 10 per cent by 2022. We are currently working on all the basic necessities to meet this target - increasing domestic production, improving the efficiency of oil consumption and moving towards BS-VI norms and promoting gas-based economy. We have brought usage of compressed natural gas and PNG (piped natural gas) on mission mode. We have covered 60 per cent of households under PNG. We are also focusing on increasing the foreign assets base of Indian companies and further reforming the midstream and downstream sectors. All of this stems from the PM's ambitious vision.

After diesel deregulation, gas pricing and Direct Benefits Transfer in Liquefied Petroleum Gas (DBTL), what is the next big-bang reform expected from the ministry?

All consumers are covered under DBTL now. We have successfully eliminated ghost connections. Now, we are starting a pilot project on kerosene. This will be done without cutting on kerosene supply for even a single poor family. In LPG (cooking gas), the distribution mechanism was with the oil marketing companies (OMCs). But in the case of kerosene, it is with the states. We are talking to the state governments to have the data digitised and to allocate kerosene to whoever needs it. A criteria will be worked out to identify the beneficiaries. The states will decide. Kerosene subsidy reform is more challenging than LPG. Discussions are on. States are keenly taking part in these discussions. It is in the states' interest, too, to accept a modern subsidy delivery mechanism.

Investors are concerned about the uncertainty in OMCs' burden sharing formula for upstream companies.

The government has managed to replace many ad hoc practices with permanence and stability in the oil sector. In the subsidy sharing formula, too, we will have stability soon. We had declared that upstream firms would not have to bear the subsidy burden in 2015-16. That decision stays. In the first quarter we have taken this call (of formula for subsidy sharing). So, there is absolute clarity on this policy and it will be codified soon.

Do you think the government has been able to completely utilise the opportunity from low crude oil prices? There is a view that product prices could have been reduced further rather than hiking excise duty.

We have brought down petrol and diesel prices significantly, taking the benefit of low crude oil prices. Yes, we have saved some money in the government's kitty (excise duty collection). Is it not the government's duty to think of building roads in a welfare state? The state has a major role to play in infrastructure creation, after all.

You had said in the beginning of the year the biggest challenge is to cut imports. But crude oil production has remained at the same level and natural gas output is down.

Bombay High production has gone up by a million tonnes. And, this is an ageing field. Ramping up production in any hydrocarbon is challenging. There are many uncertainties. We have taken firm steps that will lead to higher production. We are able to bring in heavy oil from Latin America and increase the productivity of our refineries. A lot of this has been made possible by the good work done by private companies.