Govt may absorb higher crude prices

A rise in diesel prices will be staggered over time to minimise the overall impact on the poor.

The government may absorb a further rise in crude prices, without increasing retail prices of petrol and diesel, according to the Economic Survey for 2010-11.

‘‘The prices of petrol and diesel, both at the refinery gate and retail level, will be market determined. However, it is proposed that an increase in the prices of diesel will be staggered over time to minimise the overall impact on the poor and vulnerable. It has also been decided that in case of a high rise and volatility in international oil prices, the government will suitably intervene in the pricing of petrol and diesel,” the Survey said.

Last year, petrol prices were decontrolled and prices of kerosene and LPG were raised. The selling price of public distribution system (PDS) kerosene was raised by Rs 3 per litre in Delhi, while the price of domestic LPG was raised by Rs 35 per cylinder in Delhi.

Domestic crude production is estimated to rise 12.67 per cent to 37.96 million tonnes in 2010-11. India imports 80 per cent of its crude oil.

The production of natural gas, including coal bed methane, is estimated to rise 12.8 per cent to 53.6 billion cubic metres, driven by new finds in the KG basin. Production from KG basin is expected to rise to 80 million standard cubic metres per day by 2012-13, notes the Survey.

Petroleum majors like state-owned ONGC and Reliance Industries have invested $14 bilion in India’s exploration & production. PSUs have also invested $13 billion in buying equity oil and gas assets overseas. ONGC Videsh alone produced 8.87 million tonnes of oil and oil equivalent from its assets in Sudan, Vietnam, Venezuela, Russia, Syria, Colombia and Brazil.

Piped gas is already being made available in 19 cities and could be made available in 200 cities by 2015, according to the government’s Vision-2015 document, the the Survey said.