Amidst rising fuel prices despite an excise cut on petrol and diesel last week, Prime Minister Narendra Modi held a review meeting with Finance Minister Arun Jailtey and Petroleum Minister Dharmendra Pradhan here on Friday.
"The PM's meeting in the morning was on petroleum issues. The discussion centered around increasing domestic oil production, subsidy borne by oil marketing companies (OMCs) and reducing oil imports to cut down the current account deficit," a senior official said.
The meeting assumes significance as the US sanction against Iran kicks-in on November 4 and India is dependent on imports for more than 80 per cent of its oil requirement.
On domestic oil production, Petroleum Minister Pradhan on October 1 said Rs 59 billion of investment had been committed for the exploration of 55 oil and gas blocks awarded through the first round of auctions under the country's new Open Acreage Licensing Policy (OALP).
The OALP, under the new Hydrocarbon Exploration and Licensing Policy (HELP), allows the investor to carve out blocks of their choice and submit an Expression of Interest (Eol) throughout the year. HELP replaced nine earlier rounds held under the New Exploration Licensing Policy (NELP) wherein the government carved out areas for bidding.
While the Centre would bear the excise duty cut of Rs 1.50 a litre totalling to about Rs 10.5 billion for the remaining period of the fiscal, it asked the OMCs to absorb the remaining Re 1.
Despite the cut in excise duty, which is likely to expand the fiscal deficit by 0.05 percentage points, the government said it was committed to meet the fiscal deficit target of 3.3 per cent.
The government had also stressed that by asking the OMCs to provide a subsidy of Re 1 was not going back on deregulation. The OMCs are less likely to be asked for further subsidies, as Jaitley on the day of excise cut said the government would want the OMCs to remain healthy.