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Govt still considering freeing fuel prices - Murli Deora

NEW DELHI (Reuters) - India is looking at ending subsidies on petrol and diesel retail prices but has no immediate plans to raise pump prices after the rise in global oil prices, Oil Minister Murli Deora said on Monday.

Oil Minister Murli Deora attends a ministerial session during the World Petroleum Congress in Madrid, July 3, 2008. REUTERS/Susana Vera/Files

“Nothing is on cards as of now,” Deora told Reuters when asked about reports retail petrol and diesel prices could be raised.

When asked if deregulation of fuel prices was still on agenda after the rise in crude oil prices to around $70 a barrel, Deora said: “I had said that this will be taken up in four to six weeks and we are still considering it”.

The Indian government fixes the prices of petrol, diesel, cooking gas and kerosene sold by state firms to control inflation and help poor and middle-class households. It partly subsidises state-run firms for their losses, but not private companies.

Private refiner Essar Oil Ltd last week raised the retail prices of auto fuels by 2.5-6.5 percent to keep pace with global crude oil prices , which have risen to around $70 a barrel from about $50 in late April

State-run upstream firms share one-third of the revenue losses of state-run oil retailers by offering discounts on crude sales. The government compensates for part of the remaining losses by issuing special bonds which the oil firms can sell.

Last week, an Indian Oil Corp official said state refiners were losing 6.08 rupees (13 cents) revenue on sales of a litre of petrol and 2.96 rupees on diesel sales.


Deora declined to comment on the long-running dispute on pricing and sale of gas from the Krishna Godavari basin by block operator Reliance Industries to Reliance Natural Resources, although he said the gas was a national property.

“Gas belongs to the government. Government is the solitary owner of the gas,” he said, adding that so far the allocation of gas to various sectors and its pricing was done by Reliance Industries in line with the government directives.

Reliance Industries, controlled by billionaire Mukesh Ambani, and Reliance Natural, headed by estranged younger brother Anil, have been contesting details in a supply contract agreed when the Reliance empire split in 2005.

Last week, the Bombay High Court asked Reliance Industries to supply 28 million cubic metres of gas a day (mmscmd) from its east coast block for 17 years to Reliance Natural Resources at $2.34 per million British thermal unit (mmBtu).

That price is almost half of $4.20/mBtu approved by the government.

The court gave the two brothers a month to reach a suitable agreement on the issue.

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