Work on creating strategic crude oil reserves for the country has hit a roadblock with the Oil Industry Development Board refusing to offer a grant for the purpose, and is instead sanctioning a loan.
OIDB recently approved a loan of Rs 30 crore (Rs 300 million) for Indian Strategic Petroleum Reserves Ltd, a wholly owned company of Indian Oil Corporation, which registered its protest with the government.
This was when OIDB was in a position to claim in excess of Rs 51,007.60 crore (Rs 510.08 billion) from the government as proceeds from cess on domestic crude and gas.
Officials told Business Standard that the government could easily finance the creation of reserves but it made available only a little over Rs 902 crore (Rs 9.02 billion) to OIDB till March 2004.
"OIDB, which also has other funds at its disposal, can easily give us a grant," said an IOC executive adding that ISPRL had no way of debt-servicing since it would have no source of income.
ISPRL had also sought another Rs 100 crore (Rs 1 billion) for the current year from OIDB. "The preliminary work got started only because of Rs 1 crore (Rs 10 million) put in by IOC. The government seems to be not helping," said an official.
The company was finding it difficult to even get clearances for locating the strategic reserves. Project consultants Engineers India Ltd identified Mangalore and Visakhapatnam as the appropriate locations for the reserves.
But at both these places, land acquisition is a problem. Mangalore Refinery and Petroleum Ltd, for its expansion, was looking at the same piece of land which had been identified by the consultants.
The location in Visakhapatnam was also posing a problem to ISPRL since it was naval land. Mangalore will have 1.5 million tonnes of crude reserves while Visakhapatnam will have about 1 million tonne. Both the issues of financing and land acquisition were put up for mediation by IOC to the petroleum ministry recently, said an official.
Hitting a roadblock