Megha Engineering & Infrastructures Ltd (MEIL) bagged a mandate from Indian Strategic Petroleum Reserves Ltd (ISPRL) to build India’s first private-sector strategic petroleum reserve (SPR). The project, valued at ₹5,700 crore, will be developed at Padur, Karnataka. Once completed, it will have a storage capacity of 2.5 million metric tons (MMT) of crude oil. At current prices, the crude filling cost is estimated at ₹11,020 crore.
Competitive Bidding Process
ISPRL had earlier invited bids from both domestic and international players for the second phase of SPR development at Padur. Despite outreach to global oil majors such as Saudi Aramco, and trading houses including Goldman Sachs and Vitol, no foreign firms entered the fray. Ultimately, MEIL bid—placed just under the government’s viability gap funding (VGF) ceiling of 60% of project cost (₹3,420 crore)—emerged successful, edging out two domestic competitors.
Policy Support to Attract Investors
To make the SPR projects more attractive, the government introduced policy relaxations, including:
*Eased controls on oil sales and exports from reserves.
*Extended tax incentives for participating firms.
*Provision of VGF support to cover a significant share of capital expenditure.
The government designed these measures to overcome initial investor hesitation and accelerate the development of critical energy infrastructure.
Why the Project Matters
The Padur SPR marks the largest private-sector initiative in India’s strategic oil reserves programme. It will substantially boost the nation’s energy security, which currently relies on limited reserves covering only 8–9 days of crude oil demand when filled. As reported by business-standard.com, India is expanding storage capacity under private operation. This move takes a decisive step toward strengthening resilience against supply disruptions and global oil market volatility.
