Chennai Petroleum Corporation (CPCL), Indian Oil Corporation Ltd (IOCL), and seed equity partners — ICICI Bank, Axis Bank and SBI Life Insurance — have signed for a Joint Venture Company that will implement a new grass root ₹31,500 crore–9 MMTPA (million metric tonnes per annum) coastal refinery and petrochemicals project at Nagapattinam in Tamil Nadu.

IndianOil and CPCL will together hold 50 per cent of the equity stake (25 per cent each) in the joint venture company (JVC). The rest is to be held by other financial/strategic investors, to be identified at a later stage, according to a statement.

The shares

Pending onboarding of the financial/strategic investors, the JVC is being incorporated with a seed capital of ₹5 lakh with the two promoters IndianOil and CPCL each having a 25 per cent shareholding. The balance of 50 per cent shall be held by the seed equity partners. ICICI Bank, Axis Bank and SBI Life Insurance will acquire 10 per cent stake each in the JVC.

The 9 MMTPA Cauvery Basin refinery project was approved by the Board of Indian Oil Corporation, the holding company of CPCL, in January 2021 for implementation through a separate JV. During the year, NITI Aayog also accorded approval for the implementation of the project through JV mode.

Across 1,300 acres

The new refinery complex will be set up in an area of about 1,300 acres. This new refinery will produce petrol and diesel of Bharat Stage-VI specifications and polypropylene as a value-added product. Apart from the investment of ₹31,580 crore for the refinery, another ₹4,000 crore will happen from other stakeholders on a ‘Build Own and Operate (BOO) basis, according to the latest annual report of CPCL.

The project complex will cater to the petroleum products demand of the southern region of India and provide the impetus for the economic development of the region.

On the NSE today, the share price of CPCL closed at ₹198.90, up ₹7.40 (3.86 per cent) from previous close.

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