State-run Hindustan Petroleum Corp. Ltd (HPCL) may build its second liquefied petroleum gas (LPG) cavern in Mangalore, Karnataka, said two company officials, requesting anonymity. HPCL is planning to build an underground LPG storage facility and had been in talks with France’s national oil company, Total SA, to partner it. Total SA is also HPCL’s partner in the first LPG cavern in Visakhapatnam, Andhra Pradesh.

“We are working on the plan for the LPG cavern. There is a possibility that we may be building it alone," said a senior official from HPCL.

The cavern will be the second such facility in India and will cost 1,000 crore. HPCL already has an LPG import facility in Mangalore.

HPCL did not reply to an email query by Mint on Monday.

The second HPCL official said that looking at the growing demand for LPG, a new cavern is a commercially viable option. The facility at Mangalore will be exclusively used by HPCL and may have a capacity of over 60,000 tonne. “Our board has approved the project. We now need to begin the process of obtaining technical and environmental clearances."

HPCL and Total SA, through their joint venture South Asia LPG (SALPG), operate a 60,000 tonne underground LPG storage facility in Visakhapatnam, which was commissioned in 2007 at an investment of 333 crore.

On its website, HPCL said that its cavern at Visakhapatnam has been dug in rock to store LPG. The storage facility is made up of two caverns of 19 metres in height, 20 metres base width and 160 metres in length with inter-connections.

Besides being safe from natural calamities and hazards such as sabotage and aerial bombings, the caverns are leak- and fire-proof.

The second official quoted above added that HPCL may commence the project this calendar year and complete it within the next four years. HPCL is the second largest LPG marketer in India. Last fiscal year, the company had clocked LPG sales growth of 8.5%. It also maintained market leadership in the non-domestic bulk LPG segment with over 48% market share.

According to sector analysts, the Pradhan Mantri Ujjwala Yojana (PMUY) has increased demand for LPG in India. Last month, the government expanded the ambit of PMUY to all poor households and has a target of reaching out to 80 million families by 2020.

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