Dedicating the Rs 20,000 crore-Guru Gobind Singh Refinery, he said with imports accounting for about 80 per cent of the crude supplies, the spiralling prices of crude in the international markets have put a serious strain on the import bill.
"We need to rationalise prices and at the same time ensure that the poor and needy are shielded from the effects of such a rationalisation," he said.
State-owned oil companies have not raised diesel, domestic LPG and kerosene for almost a year despite cost of raw material rising by a quarter.
The Prime Minister said in order to insulate the common man from the impact of rising oil prices, the government shouldered sizeable portion of the burden by pricing diesel, kerosene and domestic LPG below their market prices.
"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," Singh said.
The government had in June 2010 freed petrol prices from its control but PSU oil companies haven't been able to raise prices because of political pressure. Petrol price of Rs 65.64 a litre in Delhi is about Rs 9 short of its cost.
The government controls rates of diesel, domestic LPG and kerosene. Oil companies sell diesel at a discount of Rs 16.16 a litre, while they lose Rs 32.59 on sale of every litre of kerosene. A 14.2-kg domestic LPG cylinder costs Rs 570.50 less than its actual cost.
