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Niti Aayog rejects petroleum ministry’s demand for Rs 10,000 crore to build new reserves

13 Oct 2016 Evaluate

The National Institution for Transforming India (NITI) Aayog has rejected Oil ministry’s demand for Rs 10,000 crore to build new reserves as the proposal strays from the agreed plan to rope in private sector investments for crude storage beyond the present 5 million tonnes. Niti Aayog  said that there was no plan fund allocated for the project as well as any funding tie-up for it from other resources. It also said that the ministry had decided to involve the private sector in building and operating strategic storage during the preparation of the 12th Five Year Plan. 

It further said that there is significant interest in global crude oil majors to create storages to secure markets and also on arbitrage on fluctuating prices. As regards energy security, as long as the crude is stored on their mainland, they will always have the first right. Niti Aayog, therefore, added that is not in agreement with the proposal and recommended that the ministry ought to come up with a policy to encourage private sector investment instead of deploying government funds.

Under the first phase, India built 5.33 million tonnes storages at Visakhapatnam, Mangalore and Padur to provide for 12 day supply cover. Of this, Visakhapatnam has been commissioned while the other two are slated to start by end of this year. Under Phase II, the petroleum ministry plans to build an additional 10 million tonnes of storage capacity at Bikaner (5.6 million) in Rajasthan and Chandikhol (4.4 million) in Odisha to take the strategic cover to 99 days from current 75 days (63 days at refinery plus 12 days strategic). For this purpose it had asked the Ministry of Finance to provide Rs 10,000 crore partly from plan funds and partly out of the oil industry development cess collected on crude oil production as there is no Budget provision for this project.

 

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