Megha Engineering to Build India’s First Private Oil Reserve

Megha Engineering has secured the contract to build and manage the country’s first private strategic petroleum reserve. This strategic petroleum reserve will have a capacity of 2.5 million metric tons, at a cost of Rs 5,700 crore.

• Megha Engineering has been awarded a Rs 5,700 crore contract for the construction and management of India’s first private strategic petroleum reserve at Padur, Karnataka. This 2.5 million metric ton capacity facility will significantly boost India’s energy security as a complement to the existing reserves.
• This venture includes the cost of filling crude oil worth USD 1.25 billion (Rs 11,020 crore) at current rates, making it the largest private investment in strengthening the country’s energy security infrastructure.
• Padur already houses part of India’s existing strategic reserve. This new reserve will augment India’s existing 5.33 million metric ton strategic reserve, which currently provides only 8-9 days of crude oil supply capacity.

Indian Strategic Petroleum Reserves Limited

• It is a wholly-owned subsidiary of the Oil Industry Development Board (OIDB), operating under the Ministry of Petroleum and Natural Gas.
• The bidding process managed by state-owned Indian Strategic Petroleum Reserves Limited (ISPRL) was determined based on the participants’ viability gap funding (VGF) requirements.
• The existing strategic petroleum reserve facilities in India managed by ISPRL have 39 million barrels of underground storage capacity at Visakhapatnam, Mangaluru, and Padur.
• This capacity is significantly lower compared to the United States’ 727 million barrels and China’s estimated 1200 million barrels.
• In 2018, the Union Cabinet gave initial approval for two PPP model projects: Padur in Karnataka (2.5 million metric tons) and Chandikhole in Odisha (4 million metric tons).