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Naik to discuss phase-out of subsidies with Sinha tomorrow

Our Bureau

MUMBAI, Oct. 29

THE Union Minister for Petroleum and Natural Gas, Mr Ram Naik, today said he would hold discussions with the Finance Minister on October 31 to discuss phasing out subsidies on petro products.

Reiterating that the Government was committed to dismantling the prices of petroleum products by March 31, 2002, Mr Naik said a decision on subsidies, mainly on kerosene and cooking gas, would be taken soon.

Mr Naik said the secretaries of the four departments concerned _ Finance, Revenue, Expenditure and Petroleum _ had submitted their individual reports and the Petroleum Ministry had made a preliminary scrutiny of them, the Minister told newspersons after launching Oil and Natural Gas Corporation's (ONGC) Mumbai High South re-development project.

He said the subsidies on two major commodities, kerosene and LPG, would have to go. While the kerosene subsidy could be done away with easily as it is only about Rs 1.20 per litre, abolishing LPG subsidy at one stroke could pose certain problems as it is as high as Rs 100 per cylinder.

It may not be possible to abolish the subsidy on LPG by the target date, he said. Also, freight was a major component of LPG price and needed to be looked into, he added.

He categorically denied there was any plan to merge the three petroleum sector giants _ ONGC, IOC and GAIL. ``The three companies are the flagship companies of the Indian Government and it has been decided that the three would remain in the public sector ,'' he said.

Speaking to newspersons, Mr Subir Raha, Chairman and Managing Director, ONGC, said the company was in talks with several companies, public and private, for selling crude oil after the decontrol of petroleum products. Mr Raha said ONGC would sell its crud e to the ``best customer at the best price''.

He, however, said ONGC would assure its existing customers the current supply for some more time after decontrol as it would be difficult for them to suddenly reconfigure their refineries. ``They can alter their configurations within that grace period,'' he said.

Earlier, Mr Ram Naik launched the Rs 5,200-crore Mumbai High South re-development project, envisaging additional oil and gas production of 45.60 million tonnes of oil equivalent valued at around Rs 36,000 crore. Overall recovery from Mumbai High field is expected to increase from the current level of approximately 29 per cent to 34 per cent.

A Rs 2,900 crore re-development project of Mumbai High North was launched in January this year.

The South re-development includes installing 17 well head platforms, one process platform and drilling 140 wells. The programme focusses on in-fill drilling for higher well density, close-spaced water injection for better oil sweep and innovative drillin g technologies such as horizontal and multilateral wells.