Pipeline companies such as Reliance Industries (RIL) and Gail (India) may be in for a bonanza in the Budget as the government is considering tax sops for the pipeline sector.

Speaking at an Indian Oil Corp (IOC) function in Panipat on Friday, finance minister P Chidambaram said he will consider the petroleum ministry’s demand of according infrastructure status to natural gas pipelines in the Budget 2007. An infrastructure status to pipelines would entitle them to a 10-year income-tax holiday.

“Pipelines are as important as roads and railway tracks. They carry vital goods but we do not see goods getting transferred. We will take a look at the request of petroleum ministry for grant of infrastructure status,” he said while dedicating additional refining capacity at IOC’s Panipat refinery to the nation.

RIL — all set to begin gas production by June 2008 — will build at least one pipeline, Kakinada-Hazira, next year. It has also received approvals to build two more pipelines, Kakinada-Chennai and Kakinada-West Bengal, to transport gas.

Pipelines require huge capital investment and tax breaks will make the projects commercially attractive. The capacity of Panipat refinery has been expanded from 6 million tonnes to 12 million tonnes at an investment of Rs 4,300 crore.

Earlier, on the occasion, petroleum minister Murli Deora sought tax rationalisation on petroleum products and infrastructure status for oil and gas exploration business as well as pipelines to boost the sector. “We have forwarded our tax rationalisation proposals in our pre-Budget consultations for consideration of the finance minister. I am hopeful the petroleum sector shall hear good news from the finance minister in the months to come,” he said.

Indicating that energy security will play a major role in the country’s robust GDP growth, Mr Chidambaram said the country was on the high-growth trajectory and aimed to maintain a high growth of 8% for 10 years. “We seem to be on the high-growth path and we must remain there till 2020, we would aim at 9% growth and later 10%,” he said.

He said that while growing at a fast rate, we must not forget poor people indicating that the government will continue to provide subsidy on PDS kerosene and LPG. “We must be aware of our responsibilities. The government must come for the aid of the poor.”

The government provides Rs 155 subsidy on every LPG cylinder and Rs 14 per litre on kerosene. PDS kerosene is made available to poor at Rs 9 per litre.

Mr Chidambaram said the government did not hesitate in reducing the prices of petrol and diesel when the crude prices had come down. “Crude prices are not in our hand,” he said. In order to keep PSU oil marketing companies in good health, when crude prices soared to a high of $75-per-barrel mark recently, the government issued Rs 14,000-crore bonds. “More bond issues are expected this fiscal,” Mr Chidambaram said.