BUSINESS

Decision on subsidy cut on LPG, kerosene to be taken in budget

NEW DELHI DEC. 4. The Union Petroleum Minister, Ram Naik, today said that the decision on scaling down subsidies on domestic cooking gas (LPG) and kerosene oil would be taken in the next budget.

Mr. Naik, who was speaking at a seminar on petroleum sector, said the Government was in principle committed to cutting down subsidies from 3-5 per cent. But a decision on how to go about it would be taken only during discussion with the Finance Ministry at the time of preparation of the Union Budget for the next year.

He also said that the Government had adopted a multi-pronged strategy to achieve energy security, strengthen marketing infrastructure for handling increasing volumes and upgrade the fuel quality initially in nine States and four Union Territories from January next year.

While inaugurating the Petro India 2002, organised jointly by the Associated Chambers of Commerce and Industry of India (Assocham) and India Energy Forum, Mr. Naik said recent discoveries of hydrocarbons in Andhra Pradesh, Gujarat and other parts have greatly enhanced the prospects of finding these deposits making international bidding more interesting. He said ONGC Videsh (OVL) had signed an agreement with Talisman Energy Inc. of Canada to acquire 25 per cent interest in the Greater Nile Project, a producing oil field in Sudan with a reserve of 150 million tonnes and an upside potential of even more oil and gas in the block.

The deal will be finalised after non-exercise of the pre-emption rights by Chinese National Petroleum Corporation (CNPC), China (40 per cent) and Malaysian National Oil Company, Petronas, (30 per cent) and approval of the Sudan Government, which holds 5 per cent stake in the field.

This is the first ever deal for India involving purchase of stake in a producing field abroad. It incidentally turns out to be largest investment by an Indian company abroad after OVL acquired 20 per cent stake in Sakhalin Project in Russia for Rs. 8,500 crores in 2001.

Responding to the concern expressed by the chamber President, R. K. Somany, for inadequate supply of gas, the Minister said, the consortium of Reliance Industries (90 per cent) and Niko Resources of Canada (10 per cent) have made a major gas discovery in a deepwater block in the Krishna-Godavari (KG) offshore area with a preliminary gas reserve estimate of over 198 billion cubic meters.

To handle increasing volumes, the Minister said, marketing infrastructure was being accelerated by granting rights to new companies provided they were prepared to invest Rs. 2,000 crores in creating new infrastructural facilities.

Marketing rights have since been granted to two private companies and two PSEs.

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