The petroleum minister made the announcement while delivering a lecture at `India Calling' - a conference organised by the Indian Merchants Chamber (IMC) in Mumbai on Sunday. The supply of oil to other states would however, continue as usual, he said. On the issue of Maharashtra wanting to import naphtha, Mr Naik said that he would speak to Maharashtra chief minister Vilasrao Deshmukh on the issue. He added that the Centre was willing to make naphtha available to Maharashtra at the same cost as that which would be incurred while importing it.

"The state government has either not been getting correct information or they do not understand," he said, while answering a question about why the state government was not sourcing naphtha from the Centre. As regards the increase in petrol and diesel prices in Mumbai since Friday, Mr Nail said this was because the ministry has made environment-friendly fuel available in the city. "Oil companies have to spend a lot to ensure that the sulphur and benzene content is kept low in oil," he reasoned, and added that the price hike was very minimal.

Mr Naik informed that the first project for commercial exploration of coal bed methane (CBM) would be awarded in the next fortnight in West Bengal. The proposal has been cleared and it will be a joint venture, he said. Foreign investors will also be allowed to participate in the project, he added.

However, Mr Naik did not give details of the investments needed for the project. "India is one of the few countries outside of the United States which has a well-laid out programme for the commercial exploration of CBM. The vast and rich coal reserves in the country have tested to be strongly CBM-positive. The CBM policy of the government is akin to the NELP for oil and gas. Mr Naik revealed that his ministry has written to the Iraq government to increase the quantity of crude oil imported from Iraq under the United Nations (UN) `Oil for Food' programme. The ministry has requested that the oil quantity should be increased from the present 15 lakh tonne to 25 lakh tonne. "We are waiting for a confirmation from theUN," added Mr Naik.

India has already signed a memorandum of understanding (MoU) with Iraq for the exchange of crude oil for wheat, rice and tea. Mr Naik added that the government was clear about holding a majority stake of 51 per cent in the flagship companies - Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC) and Gas Authority of India Ltd (GAIL) while a disinvestment in the remaining public sector units will be carried out in a phased manner, keeping in view the long-term development imperatives of the oil sector and the need for a comprehensive regulatory framework to ensure the protection of consumer interests. Mr Naik added that the government has also decided to retain only 26 per cent equity in IBP, a pure retail marketing company and disinvest upto 33.6 per cent to a strategic investor, who will be entitled to management control of IBP.