Gearing up to enhance infrastructure for crude storage in the country, the Government is planning to set up strategic reserves for storing crude oil which would come in handy in times of crisis, in at least four locations having a combined capacity of around 13 million tonnes, situated in Rajasthan, Gujarat and Odisha.
According to official sources, the Petroleum Ministry which has already set up a special purpose vehicle (SPV) called Indian Strategic Petroleum Reserves ltd (ISPRl) for setting up such reserves across the country, has okayed four locations for the purpose namely Bikaner, Rajkot, Chandikhol and Padur (in Tamil Nadu where incidentally one reserve is already being set up).
Strategic crude oil reserves would come up in these locations in the second phase of the ISPRl project, sources said, as currently in the first phase these are already being set up in Visakhapatnam (with storage capacity of 1.33 million tonnes, Mangalore (1.5 million tonnes) and Padur (situated in Tamil Nadu near Chennai with a capacity of 2.5 million tonnes).
Sources further informed that while the combined capacity of the three reserves presently being constructed in Visakhapatnam, Mangalore and Padur is 5.3 million tonnes, the four new locations would have a combined capacity of 13 million tonnes. The feasibility study for setting up reserves in these additional locations has been conducted by the Government, they added. The idea, they said, is to create a bank of crude oil which would prove useful in times of crisis like war, natural calamity or any other emergency like situation.
Also while in the first phase, the focus was mainly on southern India, the second phase would see crude reserves coming up in locations situated in Rajasthan (Bikaner), Gujarat (Rajkot) and Odisha (Chandikhol). Sources said that this way the reserves would be spread out all across the country instead of just situated in a specific region.
Incidentally the Integrated Energy Policy formulated by the Planning Commission, had suggested that country should have crude reserves for up to 90 days, whereas currently the storage capacity is only for 72 days. Another reason behind setting up such reserves is that India depends mainly on imports of crude oil and in case there are any disruptions in supplies then it could lead to a crisis like situation in the country. Having strategic reserves with higher capacity would prove useful in such conditions, official sources said.
In fact the Petroleum Ministry has also decided to set up these reserves on public private partnership (PPP) mode and has invited tenders from global entities for seeking assistance in this regard. The ISPRl project had been envisioned by the Petroleum Ministry in 2011 and as reported by The Pioneer on March 29, 2013, it had requested the Finance Ministry to divert funds collected through cess on petrol into Oil Industry Development Fund (OIDF, which had been set up under the aegis of Oil Industry Development Board Act, wherein all the cess collected through petrol sales is to be infused).
However out of the Rs 1,14,986 crore collected by the Government till December 31, 2012, only Rs 902 crore have been put into it. Sources pointed out that Finance Ministry could have used the funds meant for OIDF, to address fiscal deficit concerns. In fact even the Parliamentary Standing Committee on Petroleum had in a report tabled before the Parliament in February this year, had advised the Petroleum Ministry to take up the matter of OIDF with the Finance Ministry.