Megha Engineering & Infrastructures Ltd (MEIL) has secured a contract from Indian Strategic Petroleum Reserves Ltd (ISPRL) to build and operate India’s first private-sector strategic petroleum reserve (SPR) at Padur, Karnataka. The 2.5 million metric tonne (MMT) project is valued at Rs 57 billion, with an estimated Rs 110.2 billion crude filling cost at current prices.

ISPRL had invited bids for the second phase of SPR development at Padur, marketing the tender globally to Middle Eastern producers such as Saudi Aramco and traders including Goldman Sachs and Vitol, though no foreign firms participated. To attract investors, the government eased sale and export controls on SPR oil and extended tax incentives, including viability gap funding (VGF) capped at 60 per cent of project cost or Rs 34.2 billion. MEIL’s bid, placed just below this ceiling, secured the project over two domestic rivals.

The facility will be built on a 214-acre land parcel provided free by ISPRL and will include storage caverns, dedicated loading and unloading facilities, and onshore and offshore pipelines. MEIL can monetise the investment by leasing storage space to the government or oil companies for steady cash flow, and trading stored crude for higher returns. In emergencies, the government will have first rights over stored oil, ensuring the reserve serves both commercial and strategic purposes.

India’s existing SPR capacity stands at around 39 million barrels across Visakhapatnam, Mangaluru, and Padur. In comparison, the United States holds 727 million barrels and China over 1,200 million barrels. ISPRL aims to more than triple India’s SPR capacity over the next decade to 15 million tonnes, meeting International Energy Agency requirements of 90 days of crude storage.