Ruling out any such hike in the prices of LPG and kerosene oil, Mr Naik told newspersons here that with the possibility of a war between the USA and Iraq, the “speculators’’ were having a field day and hence a hike in prices of petrol and diesel was “well expected’’.

He said the price of petrol per barrel had been raised by 50 per cent in the international market during the past six months and the domestic market would also have to act accordingly after the dismantling of the Administered Price Mechanism (APM).

Mr Naik said relaxation in excise duties was the way to control prices of petrol and diesel in the consumers’ interest and such a practice was also resorted to in June last.

He added that the same mechanism might again be applied after consulting the Union Finance Ministry.

Mr Naik said prices of petrol and diesel were now controlled by the oil companies and a hike in prices of these products would be announced in consultation with the Union Petroleum Ministry in October.

The Petroleum Minister said the Union Government had started three pilot projects in Maharashtra and UP in 2001 and, based on the successful results, the Centre had now made mandatory use of 5 per cent ethanol-blended petrol in UP, Punjab, Haryana, Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu and Goa and the Union Territories of Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Pondicherry from January 2003.

Mr Naik said the largest-ever investment in abroad by the country had been made by the ONGC Videsh Limited, acquiring 20 per cent stake in Sakhalin Oil Fields in Russia at a cost of Rs 8,000 crore.