The Cabinet Committee on Economic Affairs on Friday approved building 5 million tonnes of strategic crude oil reserves at an estimated cost of Rs 11,267 crore (Rs 112.67 billion) through Oil Industry Development Board cess.
Storages would be built over 9 years and operating the stockpile would cost about Rs 90 crore (Rs 900 million) per annum, Defence Minister Pranab Mukherjee told reporters after the CCEA meeting chaired by Prime Minister Manmohan Singh in New Delhi.
The strategic storages would be built at Mangalore and Vizag by Indian Strategic Petroleum Reserves Ltd, a subsidiary of OIDB.
Indian Strategic Petroleum Reserves Ltd would implement and manage the strategic crude oil storages.
State-run refiner Indian Oil Corp was to float a special purpose vehicle - ISPRL - for building the reserves but the CCEA has now decided that equity held by IOC in the SPV would be transferred to OIDB.
"The project will enhance the energy security of the country particularly during short term oil disruptions," he said.
India imports 73 per cent of its crude oil requirement and spent some Rs 83,000 crore (Rs 830 billion) in 2004-05 on crude oil imports. The strategic reserves are envisaged as an insurance against any disruption in supplies.
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