Prime Minister Manmohan Singh has warned that the government must raise diesel, kerosene and cooking gas prices in a phased manner as India's fuel prices are well below international prices. Sources have told Network 18 that the government may consider hiking diesel prices by Rs 2 to 3 per litre and LPG by Rs 50 to 75 rupees, in line with the Kelkar committee report recommendations.

"Energy remains under priced in our country, with coal, petroleum products and natural gas prices well below international prices. To meet our target of rapid, inclusive and sustainable growth we must undertake a phased rationalisation (rpt) rationalisation of energy prices to bring them in line with world prices," Prime Minister Manmohan Singh said on Monday.

Laying the foundation stone of the Rs 20,000 crore BPCL-Kochi Refinery's Integrated Refinery Expansion project at nearby Ambalamugal, Singh said adequate supplies of energy at affordable prices was needed for the country to achieve its target of rapid growth.

Noting that the country was dependent on imports to meet major portion of its crude oil requirements, he said large-scale investment was required for exploration of oil and gas within the country as also acquisition of overseas assets in the sector and strengthening of the marketing and distribution infrastructure.

The government was committed to encouraging companies to undertake domestic exploration for oil and gas and the public sector companies were also looking at opportunities abroad. The BPCL had made some significant successes in the upstream exploration and production sector, particularly in Mozambique and Brazil, he said. (PTI)