New Delhi: Government is mulling levy of a 10-20 paise per litre cess on petrol and diesel to fund build up of 45 days' strategic crude oil reserves to meet contingency requirement like disruption in supplies in the event of war.

In the first phase, 15 days' storage capacity for crude, on the lines of the ones maintained by the US, would be built at an estimated cost of Rs 1,250 crore over the next three years, highly placed sources said.

Among the options being considered is budgetary grant or levy of specific tax (cess) on petroleum products for financing the strategic crude oil reserve project.

Since Finance Ministry is already constrained, a cess of Rs 0.10 per litre on all petroleum products or Rs 0.20 per litre on transport fuels like petrol, diesel, light diesel oil and aviation turbine fuel can be levied, they said.

When contacted, petroleum secretary B K Chaturvedi said a committee of secretaries would meet shortly to explore the options available.

"All options are being explored," he said adding state-run Indian Oil Corporation (IOC) will appoint a consultant for the techno-economic feasibility of building the strategic reserves.

The Prime Minister had on February 3 approved the project for building 45 days (15 million tonnes) strategic crude reserves, at an estimated capital cost of Rs 4,350 crore and an inventory (crude) carrying cost of Rs 1,800 crore per annum.

Chaturvedi said locations and other details of the storage facilities would be finalised in consultation with the Defence Ministry.

PTI