Bathinda (Punjab), April 30 Prime Minister Manmohan Singh Saturday hinted at an impending hike in fuel prices saying that there is need for such an exercise to balance the effects of the spiralling oil import bill.
"With imports accounting for about 80 percent of our crude supplies, the spiralling prices of crude in the international market have put a severe strain on our import bill," Singh said in a speech while inaugurating a refinery here.
"We also need to rationalize prices and at the same time ensure that the poor and needy are shielded from the effects of such a rationalization," he said.
The prime minister's comments came in the wake of demands by oil marketing companies (OMCs) which say they either be allowed to raise petrol prices or the government should compensate them for the underrecoveries. The OMCs say their inability to raise prices from Dec 16, 2011 to March 31, 2012 has resulted in total under-recovery of Rs.2,287 crore.
Earlier this month, they virtually threatened to increase petrol prices by Rs.8.04 a litre, asking the government to otherwise cut excise duty on petrol and give them Rs.49 crore a day in compensation.
The government had deregulated petrol pricing since June 2010 but continues to control and subsidise the prices of diesel, kerosene and cooking gas on political considerations.
The prime minister said India faced an enormous challenge on the energy front and domestic sources of crude oil and gas were inadequate to meet the needs of a growing economy.
"The challenges we face on the energy front are formidable. We need adequate supplies of energy at affordable prices. Domestic sources of crude oil and gas are inadequate to meet the growing demands of our rapidly expanding economy," he said.
India also needed to conserve energy and there was "no room for inefficient and wasteful usage of fuel", said the prime minister.
The Rs.21,500-crore Guru Gobind Singh Refinery at Phullokari village near Bathinda town in southwest Punjab that Singh inaugurated is a joint venture of Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investment Pte Ltd (MEL), Singapore, a Lakshmi N. Mittal group company. MEL has 49 percent stake in the refinery project.
The project had become fully operational recently.