Straightforward Business Report

Megha Engineering & Infrastructures Ltd (MEIL) has secured a landmark contract to construct and manage India’s first privately operated strategic petroleum reserve (SPR), according to an Economic Times report.

The project, worth ₹5,700 crore plus a crude-filling cost estimated at $1.25 billion (₹11,020 crore), will create a 2.5 million metric tonne (MMT) reserve in Padur, Karnataka. MEIL has five years to complete the facility and will operate it for 60 years under a long-term concession.

Once functional, the Padur reserve will significantly expand India’s current SPR capacity of 5.33 MMT, which provides only eight to nine days of crude consumption cover.

The bidding process, overseen by the state-owned Indian Strategic Petroleum Reserves Ltd (ISPRL), was decided based on the viability gap funding (VGF) sought. MEIL’s bid came in just under the 60% cap of ₹3,420 crore, edging past two unnamed competitors.

India currently stores around 39 million barrels at Visakhapatnam, Mangaluru, and Padur. This remains modest compared to global benchmarks—the U.S. holds 727 million barrels, while China maintains over 1.2 billion.

As part of the deal, ISPRL will transfer 214 acres of land at Padur to MEIL free of cost. MEIL will recover its investment by leasing capacity to the government or oil firms, and by trading crude. In emergencies, however, the government will retain first rights to access stored oil.

The project will also include building offshore and onshore pipelines, along with loading and unloading systems.

Known for its EPC (engineering, procurement, and construction) work in refineries, rigs, and pipelines, MEIL is now diversifying into energy storage. Private sector participation in SPRs has been on the agenda for over a decade, with Cabinet approval in 2018 paving the way. This contract signals a decisive step in involving private players in India’s strategic energy security.

Analytical Energy Focus

India’s Energy Security Gets a Private Boost with MEIL’s Padur Deal

India has taken a major step in energy security by awarding Hyderabad-based Megha Engineering & Infrastructures Ltd (MEIL) the contract to build and operate the nation’s first private strategic petroleum reserve (SPR), the Economic Times reported Tuesday.

The Padur facility in Karnataka, valued at ₹5,700 crore plus an additional crude-filling cost of $1.25 billion (₹11,020 crore), will add 2.5 MMT of storage. MEIL has been given five years for construction and a 60-year concession to operate the facility.

Until now, India’s entire SPR program has been managed by the state-owned ISPRL, covering just over a week of the country’s crude demand. The new unit marks the beginning of private participation in what has long been considered a sensitive sector.

The bidding was based on viability gap funding (VGF), capped at 60% of the project’s cost. MEIL’s proposal, just under ₹3,420 crore, beat two undisclosed rivals. ISPRL will now transfer 214 acres of land in Padur to MEIL free of charge.

Globally, India’s oil buffer remains small. While India holds about 39 million barrels, the U.S. stores 727 million and China more than 1.2 billion. By comparison, the Padur reserve represents a small but important step in bridging the gap.

MEIL will recover its investment by leasing capacity or trading crude, with flexibility to profit from commercial operations. At the same time, the government will retain priority rights to the stockpile during emergencies.

The facility will not only store crude but also build associated infrastructure—pipelines, jetties, and loading systems.

For MEIL, traditionally strong in EPC contracts for refineries and rigs, the Padur project marks a foray into energy storage. Analysts say it could open doors for more private involvement in India’s strategic reserves, especially the planned 4 MMT site in Chandikhol, Odisha.

Narrative Style for General Readers

Hyderabad’s MEIL to Build India’s First Private Oil Storage Reserve

Hyderabad-based Megha Engineering & Infrastructures Ltd (MEIL) has made history by winning the contract to set up India’s first privately run strategic petroleum reserve (SPR), according to the Economic Times.

The Padur project in Karnataka is pegged at ₹5,700 crore, with an additional crude-filling expense of about ₹11,020 crore. It will create a storage capacity of 2.5 million metric tonnes (MMT). MEIL has been given five years to build the cavern and will run it for the next six decades.

Until now, India’s strategic reserves—located in Visakhapatnam, Mangaluru, and Padur—have all been run by the government-owned ISPRL. Together, they cover just eight to nine days of crude demand. With the new Padur facility, India takes its first step in allowing private players into a field central to energy security.

The contract was decided on the basis of viability gap funding (VGF). MEIL sought support just under the ₹3,420 crore cap, outbidding two unnamed competitors. It will also receive 214 acres of land in Padur free of cost.

Globally, India’s reserves pale in comparison: about 39 million barrels versus the U.S.’s 727 million and China’s 1.2 billion.

MEIL will be able to lease capacity or trade oil commercially, but in case of emergencies, the government will retain first rights over the stored crude. The project also includes developing pipelines, jetties, and loading systems.

MEIL, known for its work in refineries, rigs, and pipeline construction, is now diversifying into storage. It is also working on an LPG storage project for HPCL. The Padur win signals a new chapter for private involvement in India’s energy preparedness, with the larger Chandikhol reserve in Odisha likely to follow.