The government will soon invite bids from private energy firms to set up two new strategic crude oil reserves under the public-private participation (PPP) mode where it may also provide viability gap funding (VGF) to incentivise private sector investors, two officials said.
The Cabinet approved the proposal to set up commercial-cum-strategic crude oil reserves earlier this month, paving the way for setting up of two new projects that can store 6.5 million tonnes (MT) of crude oil, which will be sufficient to meet country’s fuel requirements for 11.5 days, the officials said, requesting anonymity.
“The new projects will augment India’s strategic crude storage capacity from 5.33MT to 11.83MT. As per the consumption pattern of 2017-18, the total capacity is estimated to provide for 21.07 days of India’s crude oil requirement,” an official in petroleum ministry said. According to Petroleum Planning and Analysis Cell (PPAC), consumption of petroleum products in 2017-18 was 206.2MT.
Existing three operational underground crude oil reserves built by state-run Indian Strategic Petroleum Reserves Ltd (ISPRL) in the phase 1 will, however, be wholly-owned by the government, the official said. ISPRL’s three operational crude oil storage facilities are located in Visakhapatnam (1.33MT), Mangaluru (1.5MT) and Padur (2.5MT).
“The three strategic reserves, already built under phase 1, are strategic in nature. Crude stored here would be used during an oil shortage event as per the government’s directive.