President Pranab Mukherjee Monday called for a closer alignment of domestic prices of petroleum products with global prices, saying it is in the interest of both consumers and investors and necessary for a sustainable future.
He said that for an over-8 percent growth during the 12th plan (2012-2017), India has to ensure a better demand management, maintaining a balance between energy consumption and its cost and availability.
"In the present international environment of rising petroleum prices, greater alignment of prices to global prices is in the interest of both consumers as well as investors," Mukherjee said inaugurating the international Petrotech 2012 conference here.
In June 2010, the government decontrolled petrol price and has said it would free diesel rates in a calibrated manner.
"Just like the financial markets, the world energy markets are inherently global and interdependent, and no single country can isolate itself from the market," the president said.
The president said the government is committed to a time-bound programme to achieve the alignment between domestic and international market prices.
"I expect the industry to play a helpful role in achieving the government's objectives," he added.
The president also called for country-wide gas pipeline transportation infrastructure.
"The government is also currently extending full support to companies acquiring overseas oil and gas assets and imports of LNG. It would, in this context, be necessary to accord due priority to the development of a countrywide gas pipeline transportation infrastructure."
Speaking at the inaugural session, Petroleum Minister S Jaipal Reddy said the government plans to unveil in a few months a new oil exploration policy which would be more investor-friendly.
Reddy said a committee, headed by the prime minister's Economic Advisory Council chairman C Rangarajan, is looking into improvements in the exploration policy as well as the terms of contracts signed by companies to explore and produce oil and gas.
The previous nine bid-rounds under the New Exploration Licensing Policy (NELP) had seen lukewarm international response because of issues like tight regulations on pricing as well as delays in getting approvals.
Exploration companies have issues with the lack of pricing and marketing freedom as well as fiscal stability. The government controls both fixing of natural gas price as also nominates buyers and quantities to be sold to them.
Current Production Sharing Contracts (PSCs) provide for explorers to first recover all of their capital and operating expenditure from oil and gas revenues before sharing profits with the government under a specific formula.
Reddy said the government has so far awarded 254 blocks for exploration in nine rounds of NELP, which have yielded 114 hydrocarbon discoveries.