Budget 2024: ISPRL Phase II gets a huge boost at ₹408 crore from ₹40 crore in FY23-24 – CNBC TV18
Finance Minister Nirmala Sitharaman, in her budget speech on Tuesday (July 23), announced a massive jump in the allocation for Indian Strategic Petroleum Reserve Ltd (ISPRL) Phase II (Construction of Caverns) at ₹408 crore from ₹40 crore in the last budget.
The construction of the strategic crude oil storage facilities is managed by ISPRL, which is a wholly-owned subsidiary of the Oil Industry Development Board (OIDB) under the Ministry of Petroleum and Natural Gas.
During the first phase, ISPRL built a strategic petroleum reserve in underground unlined rock caverns to store 5.33 million tonnes (MT) of crude oil at three different locations. These included Andhra Pradesh’s Visakhapatnam (1.33 MT) Mangalore (1.5 MT) and Padur (2.5 MT) in Karnataka.
A few months ago, ISPRL invited bids to construct 2.5 MT of underground storage at Padur. This comes as India is planning to come up with its first commercial crude oil strategic storage as part of the efforts to shore up stockpiles as insurance against any kind of supply disruption, PTI reported.
Under the second phase, ISPRL looks forward to coming up with a commercial cum strategic petroleum reserve in the underground unlined rock caverns along with associated above-ground facilities to store up to 2.5 MT of crude oil at Padur-II. The estimated cost of the project is said to be ₹5,514 crore.
While the storages in phase-I were completely built at government expense, ISPRL in its tender stated that the Padur-II project shall be constructed in a PPP (public-private partnership) model. In this, the private parties will have to design, build, finance, and operate the storage.
For Padur-II, ISPRL is reportedly acquiring about 215 acres of land.
As India currently meets more than 85% of its oil needs through imports, it will be able to use the strategic reserves in any emergency situation — war, supply disruption etc.
ALSO READ | EXPLAINER: What is the Strategic Petroleum Reserve?
Allocation
In the 2023-24 Budget, the central government allocated ₹5,000 crore to fill the vacant slots in the caverns. However, this plan was deferred mid-year. This year, no allocation was made in the interim budget for 2024-25, presented on February 1.
It is to be noted that of the phase-I reserves, the Abu Dhabi National Oil Company (Adnoc) has already hired half of the 2.5 MT storage capacity at Padur. Besides that, it has also hired a 1.5 MT facility at Mangalore.
While ISPRL has hired the remaining 1.25 MT at Padur, the 0.75 MT of vacant storage at Mangalore will reportedly be leased out.
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