The figure is expected to be extended to 15 million metric tonnes with a mandatory requirement for all oil companies to maintain crude inventories to cover 60 days.

According to the Financial Express (FE) paper, the Strategic Petroleum Storage Bill will have three major provisions: a cess on all refineries and importers of petroleum products to cover the interest and operating cost of the US$1.7 billion project, mandatory inventory for all oil companies, and the designating of the government as the only authority which can release the crude in a time of national emergency.

“The Indian Strategic Petroleum Reserves Ltd has been set up to build and operate the strategic crude oil storages and Engineers India Ltd is updating its feasibility report on building crude storages to include the third site near Mangalore,” said the paper.

“Rajkot, which was identified earlier as one site for building tankages, was turned down by the defence ministry on security concerns,” it added.

The Rajkot incident is not the only setback to hit the Bill, however. In an interview with the FE an anonymous “senior government official” said, “The government had originally estimated that Rs 6,300 crore (US$1.36 billion) will be required for creating these reserves. However, with the recent upsurge in crude oil prices, the cost of purchasing 5 million tonnes of crude oil alone has touched Rs 6,800 crore (US$1.5 billion).”

“This, along with construction of strategic storage tankages at Mangalore and Vizag at a cost of Rs 1,300 crore (US$281 million) will push up the total cost to more than Rs 8,000 crore (US$1.7 billion),” added the insider.