The Petroleum Ministry has approached the Finance Ministry and the Planning Commission, seeking approval for the revised cost estimates for the strategic crude oil storage projects in Mangalore and Padur , which are facing delays.

The projects, which are expected to go on stream this year, are likely to be completed around August next as per the revised estimates.

The government is setting up storage facilities of 5.33 million tonnes of crude oil at Visakhapatnam (1.33 million tonnes), Mangalore (1.5 million tonnes) and Padur (2.5 million tonnes) to enhance the country’s energy security. The projects are being implemented by a special purpose vehicle , Indian Strategic Petroleum Reserves Ltd. (ISPRL).

Cost overrun

For the Mangalore project, the government has revised the cost estimates to Rs.1,227 crore from Rs.731.72 crore. Similarly, for the Padur project, the cost estimates have been revised Rs.1,693 crore from Rs.993.28 crore. According to an official note of the Petroleum Ministry, the physical progress achieved so far at Mangalore was 87.1 per cent.

The order for laying of 11-km pipeline for the project is yet to be placed, which can lead to delay in commissioning of the project to August, 2014.

For the Padur project, the physical progress achieved was around 84.3 per cent. But again, the order for laying the 36-km pipeline was yet to be placed, which can delay the project to around August next. The Mangalore project was scheduled to be completed by September 2013 and Padur by December 2013.

The government has also drawn up a plan to set up an additional 12.5-million tonne strategic crude oil storage capacity in the country.

The projects will be set up in Bikaner, Rajkot, Chandikhol and Padur. ISPRL has already conducted a detailed feasibility study for these projects.

The Integrated Energy Policy (IEP-2008) recommends that India should have crude oil reserves for 90 days as buffer stock for emergency supplies.