NEW DELHI: Work at the sites of two of India’s strategic oil reserves in Karnataka has come to a halt as a water crisis has enveloped the region.
The public sector Mangalore Refinery and Petrochemicals has shut down its 300,000 barrels per day plant. Managing director UK Basu said on Thursday that crude suppliers mostly from Iran have been asked to defer their shipments while the company has moved the state high court to restore its supplies.
With water shortage in the region reaching crisis proportions, the district administration has closed the tap on all non-essential supplies like those to industries like MRPL and the underground strategic reserves.
While water scarcity is rising in India, this is the first time that work at more than one industrial project has had to be stopped. Bangalore too is facing a crisis as the water level in Krishnarajasagar reservoir is expected to drop below the mark up to which water can be drawn.
Basu said MRPL has now declared ‘force majeure’ at the refinery. He said all exports from the refinery except some to Mauritius, which totally relies on MRPL, will be hit.
As the news came out, shares of the company fell 1.6% on the BSE to close at Rs 65.60.
MRPL accounts for a little over 6% of the total production by Indian refineries. Since the throughput by refineries is far more than India’s domestic needs, the shutdown will not affect the immediate availability of petroleum products at the retail level.
The refinery has faced serial crises over the last one year as supplies from its primary crude supplier Iran got disrupted. Because of problems on making payments that can bypass US sanctions against Iran, supplies to the refinery had become erratic. Even now, there is a stop-gap arrangement through which payments are made to Iran. MRPL typically distils heavy crude available mostly in Iran and Saudi Arabia.
Agencies reported that one vessel carrying Iranian oil is waiting at anchor at New Mangalore port, while three, including one cargo from Tehran, are scheduled for arrival later this month.
MRPL had already shut two-thirds of its refinery last week due to water shortages.
Work on two sites of Indian Strategic Petroleum Reserves at Mangalore and at Padur, near Udupi has also come to a halt. The reserves are part of three the government is building to store 5 million metric tonnes of oil to serve as cushion against disruptions of foreign supplies.
The reserves are to be stored in underground rock caverns, which are reckoned the safest way to store them. But building the capacity needs huge water supply which has become the bone of contention with the local population.
According to the Central Water Commission’s latest data, water levels in s 82 key reservoirs is 16% below that of last year.
When contacted, State Large and Medium Industries Minister Murugesh Nirani said he was in Japan on an official trip and can comment on this issue only after he returns to Bangalore next week. Even the key officials of the commerce and industries department are accompanying the minister, to drum up support for its Global Investors Meet (GIM) in June.
The plant which requires 5.5 million gallons of water everyday receives supplies from the Nethravathi river in the Dakshina Kannada district, but the failure of summer rains has led to severe shortage. The depletion in water resources in the Nethravathi and other connected dams started in March, and the district administration had asked MRPL to stop the intake of water from the river.