Package for oil firms in a month

The government may announce a fiscal package by the end of the month to help oil marketing companies overcome their losses.

Petroleum and Natural Gas Minister Murli Deora said he would meet Finance Minister P Chidambaram next week to discuss the issue of pricing and subsidies.

"The finance minister is very sympathetic to the problem. We expect some announcement by the end of the month," Deora told reporters on the sidelines of a roadshow inviting bids for the third phase of Coal Bed Methane exploration.

Oil marketing firms, including Indian Oil, Bharat Petroleum, and Hindustan Petroleum, which are incurring huge losses due to state-imposed price controls, had expected favourable tax changes in the Budget. The new package is likely to be based on the C Rangarajan report recommending lowering of duties on petroleum products and raising of retail prices to lower oil firms' losses.

While Deora did not rule out a marginal hike in prices of petroleum products, he added that he would ensure that the common man was not burdened. He said that while some suggestions of the Rangarajan panel were welcome, others like raising LPG price by Rs 75 per cylinder were difficult to implement.

"We are trying to see that consumers, especially small and vulnerable sections, are not burdened. We always try that there are no (price) increases but sometimes it is unavoidable," he said.

He added that a clear picture on pricing would emerge only after the finance ministry's stand on subsidies on LPG and kerosene and rationalisation of duties was known.

On the prospects of Coal Bed Methane exploration, he said ONGC, Reliance Industries and Great Eastern Energy Corp had discovered over 6 trillion cubic feet of gas reserves below coal seams in the earlier rounds.

"Based on the exploration work carried out so far, results in some of the (coal-bed methane) blocks have exceeded our expectations and three operators have established in-place gas reserves of over 6 trillion cubic feet."

The government had formulated the coal bed methane policy to harness the gas lying below coal seams, he said, adding that 16 CBM blocks had already been offered for exploration. CBM-III is offering 10 blocks - two each falling in Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Rajasthan, and one each in Jharkhand and West Bengal.