Govt defers ₹5,000 crore spending on strategic petroleum reserves in FY24

The Finance Ministry on Saturday said that it has deferred its plan to spend ₹5,000 crore in FY24 to refill the strategic petroleum reserves.

In a post on X (formerly Twitter), the Ministry said that the Department of Expenditure has recommended that the proposal for filling crude oil be deferred, considering the emerging trends in oil markets.

Besides, it said that of the plan to provide ₹30,000 crore as capital support to the PSU oil marketing companies (OMCs) for green energy and net zero initiatives, ₹15,000 crore will be provided to Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation in FY24.

The decision was taken in November last year during the Expenditure Finance Commission (EFC) meeting.

“Based on the recommendations of the EFC, approval of the Cabinet Committee on Economic Affairs (CCEA) is being sought. The draft note for approval of CCEA is under process in the Ministry of Petroleum & Natural Gas (MoPNG),” it added.

In the budget proposals for FY24 for the construction of caverns for storing crude oil, the government proposed a capital expenditure of ₹5,000 crore for Indian Strategic Petroleum Reserves (ISPRL) to replenish crude oil reserves.

ISPRL has established crude oil storage facilities with a capacity of 5.33 million tonnes (MT) at – Vishakhapatnam (1.33 MT), Mangaluru (1.5 MT) and Padur (2.5 MT) – under Phase I of the SPR programme. This is equivalent to around 38 million barrels and can serve India’s crude requirement for 9.5 days.

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Under Phase II, the government in July 2021 approved establishing two additional commercial-cum-strategic reserves with a total storage capacity of 6.5 MT at Chandikhol (4 MT) and Padur (2.5 MT) under the public-private PPP) mode. These reserves will meet an additional 12 days of India’s crude requirement when completed.

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