NEW DELHI: The government may rope in private refiners and state firms from West Asia to build five new crude reserves worth Rs 20,000 crore and is also considering tax incentives to attract foreign firms to build and use the assets.Collapsing oil prices and concerns that declining US dependence on oil supply from West Asia may make oil installations in the region more vulnerable to attacks has strengthened the case to guard against potential energy supply disruption, industry executives said. India’s plan to build three reserves in the first phase is nearing completion with one having finished construction and waiting for the fill and the other two slated to be ready towards the end of the year.State-run refiners Indian Oil Corporation and Hindustan Petroleum Corporation will purchase 1 million metric tonne (MMT) of crude supplies together to fill up the first reserve over the next three months, timing purchases in a way to prevent price spike, a government official said. The government has budgeted Rs 2,400 crore for filling the first reserve.In the second phase, the government plans to build five reserves, with a combined capacity to hold 12 MMT of crude oil, higher than 5 MMT in the first phase, which could act as a buffer for more than a month in case supplies to the country are disrupted. This gains significance given India’s dependence on imports for nearly 80% of its oil requirements, mainly from the Gulf region, where a dropping US interest can make supplies from the region more vulnerable.A shale gas boom in the past few years at home has dramatically cut the world’s sole superpower’s dependence on the Gulf countries and its interest in ensuring a calm energy supply environment.Given the huge investment needed to build fresh reserves, the government wants private players to chip in. “We are exploring the option of private financing,” a government official told ET. The government spent nearly Rs 4,000 crore to build reserves in the first phase.The funding can come from national oil companies of energyrich Gulf nations or the private refiners in India, who can use this to store their inventory for refining or trade, the official said. The Indian government , however, will have the first right to access these reserves in case of supply emergencies, he said.For the plans to fructify, the government needs to first overcome a tax hurdle. The crude imported and stored in the reserves will attract local taxes, which could be an unnecessary cost and disincentive for private players.Indian Strategic Petroleum Reserves Ltd (ISPL), the state firm responsible for building oil reserves, has appointed a consultant to resolve the issue, so that private firms can fill in and draw out supplies as per their business needs without any tax implication, the government official said, hoping there could be a way out in the next few months.