At least two foreign national oil companies (NOCs) so far have shown interest in storing their crude oil in Indian caverns and make it available to the country in the time of crisis. Indian Strategic Petroleum Reserves Ltd. (ISPRL) is developing 5.33 MMTPA underground crude oil storage caverns at Visakhapatnam, Mangalore and Padur. All the three projects are nearing completion. However, ISPRL was faced with a mammoth task of funding Rs 25,000 crore required to fill the caverns with crude oil.
However, foreign NOCs who have shown interest in the caverns are willing to store the crude oil in the caverns only if they are given the freedom to sell it to Indian refiners or allow India to take recourse to the stock of crude during emergencies but at a level playing field. However, taxation issue is posing a challenge for the government. The government has to decide whether the crude sold from the cavern should be treated at par with the imported crude oil or as domestically available crude is the issue which needs to be decided. While treating it at par with imported crude will free it from state level taxes, if it is treated at as domestically produced crude will attract both state and central level taxes.