The Hindu Business Line : IOC targets financial closure of Paradip refinery project by Nov

Kolkata, Oct. 1 IndianOil hopes to achieve financial closure of the proposed Rs 30,000-crore grassroots refinery project at Paradip in Orissa by November.

The company has already finalised funding the loan and equity components in the project. Initial agreement on the cost of borrowings has also been reached with the identified lending agencies.

The loan agreements will be firmed up following board approval of the respective banks and financial institutions, paving the way for IOC to seek approval from its board for financial closure in November.

“The draft term sheet finalising the loan and equity components in the project are ready. Discussions with the banks and financial institutions as identified by SBI Caps are also over. The banks and financial institutions will now approach their respective boards for formalising the loan agreements. The process will take a little more time than usual due to the ensuing festive season and is expected to be over by the month-end,” an IOC source told Business Line.

“Once the lending agencies come up with firm proposals, we (IOC) will take a week or two to complete the formalities at our end. In all fairness, we hope to seek board approval during its meeting in November,” the source said, adding that the company was focused on commissioning the refinery in 2012. IndianOil has identified the technologies to be used in the refinery and has floated tenders for appointing the project management contractor (PMC) based on initial board approval.

It may mentioned that in view of a phenomenal increase in project costs during the last two years, the company had dropped its original proposal to set up an integrated refining-cum-petrochemicals complex at Paradip.

According to the previous estimate, the integrated refining and petrochemical complex was to be set up at a total investment of Rs 25,000 crore. As per the amended plan, the company proposes to build the petrochemicals complex in the second phase.

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