The Indian government has unveiled plans for Phase‑II of its Strategic Petroleum Reserves (SPR) under a public‑private partnership (PPP) model, with an estimated project cost of ₹14,527 crore. The expansion aims to boost energy security by adding 6.5 MMT of storage capacity across Odisha and Karnataka.

Key Takeaways

  • Total project cost for SPR Phase‑II: ₹14,527 crore
  • Government VGF capped at 60 % of the total cost
  • New capacity: 4 MMT in Odisha and 2.5 MMT in Karnataka

Project Overview

Phase‑I established three commercial‑strategic caverns in Visakhapatnam (1.33 MMT), Mangalore (1.5 MMT) and Padur (2.5 MMT), completed between 2016 and 2018, delivering a cumulative 5.33 MMT of crude storage. Phase‑II will add two more facilities, raising total strategic capacity to 6.5 MMT.

Financing and PPP Structure

Union Minister of State for Petroleum, Suresh Gopi, explained that the Viability Gap Funding (VGF) will be capped at 60 % of the ₹14,527‑crore outlay, with the remaining investment sourced from private partners. This arrangement is designed to make the project commercially viable while limiting fiscal exposure.

Why This Matters

BozokMedia analysis shows that strengthening strategic reserves through PPP not only safeguards against global oil price volatility but also creates a new revenue stream for private investors, aligning national security with economic growth.

"Expanding strategic reserves under a PPP framework enhances India's energy resilience while unlocking private capital for critical infrastructure," says energy analyst Dr. Anita Singh.

Historical Background

In July 2021, the government approved an additional 6.5 MMT of storage capacity—4 MMT in Odisha and 2.5 MMT in Karnataka—marking a decisive step in the country's long‑term energy security strategy. The Phase‑I caverns were commissioned between 2016‑2018, setting the foundation for this latest expansion.

Did You Know?: India's first strategic petroleum reserve was inaugurated in 2015, and the program has been expanded in successive phases to meet rising demand.

Frequently Asked Questions

Q1: Which locations are being considered for the new Phase‑II caverns?
A: Site assessments are ongoing, with priority given to potential locations in Odisha and Karnataka.

Q2: Why is the VGF limited to 60 % of the project cost?
A: The cap balances government spending with the need to attract private investment, ensuring fiscal prudence and project viability.