New Delhi, April 13: The Gulf kingdom of Abu Dhabi has offered to fill up the crude oil storage facilities coming up in south India, leading to savings of Rs 25,000 crore in precious foreign exchange.
As much as 5.3 million tonnes (mt) of crude storage facilities is being built at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka — enough to meet the country’s requirement for almost a fortnight during crisis.
The storage tanks will be ready for commissioning this fiscal.
However, Abu Dhabi has said it will fill up the tank without paying the “storage fee”. It will only pay for the operational and maintenance costs.
Oil ministry officials were upbeat on the proposal and said they would set up a joint working group to examine its merits, particularly from the cost-benefit perspective.
Apart from the Abu Dhabi offer, officials said various options were being considered for the optimal utilisation of the facilities. Besides renting them out, the government may mandate Indian Strategic Petroleum Reserves Ltd, which is building the facilities, to fill them up.
However, the second option means an additional government expenditure of Rs 25,000 crore at current crude prices.
The oil import bill during the last fiscal amounted to nearly $145 billion and is the primary cause for the record current account deficit. With the government looking to contain fiscal deficit below 4.8 per cent of the gross domestic product this fiscal, the oil ministry will have to look at other sources for funding the storage than taking it from the finance ministry.
India, which is 79 per cent dependent on imported crude, has reserves of around 3.5mt with BPCL, HPCL and IOC. Plans are afoot to raise the capacity to 15mt, enough to meet the requirements for 45 days.
Apart from the 5.3 million tonnes storage tanks, the oil ministry is studying the prospects of constructing an additional storage capacity of 12.5 million tonnes as strategic reserves.