Energy remained under-priced in the country with coal, petroleum products and natural gas prices remaining well below international prices, he said laying the foundation stone for the Rs 14,225 crore BPCL-Kochi Refinery's Integrated Refinery Expansion Project at nearby Ambalamugal.
"To meet our target of rapid inclusive and sustainable growth, we must undertake a phased rationalistion of energy prices," Singh said.
The Prime Minister said the central and state governments must work together to create awareness among the public on the need for curbing energy subsidies.
"To achieve our target of rapid growth, we need adequate supply of energy at affordable price. Oil and gas will continue to meet a very large part of our energy requirements for many years to come," he said.
Pointing out that India remained dependent on imports for meeting a major portion of its crude oil requirements, he said "it is for this reason, we will require large scale investments in the field of exploration for oil and gas."
He said the government remained committed to encouraging companies to undertake domestic explorations for oil and gas.
"Our public sector companies are also looking at opportunities abroad. I am happy to know that BPCL has made significant successes in the upstream exploration and production sectors, particularly in Mozambique and Brazil," Singh said.
The BPCL-Kochi refinery project, expected to be completed by December 2015, aims at meeting the country's growing energy needs and make auto fuels more environment-friendly.
It envisages increasing the refining capacity of the Kochi refinery from the present 9.5 million metric tonnes per annum (MMTPA) to 15.5 MMTPA.