International Finance Corp, the World Bank’s private-sector financing arm, may part-finance HPCL-Mittal Energy Ltd’s (HMEL) $480 million expansion of the recently commissioned Bhatinda oil refinery in Punjab.

The project involves the rebalancing of the Guru Gobind Singh Refinery, a greenfield facility located in Punjab, to increase its capacity from 9 million tonne per annum to 11.2 million tonne to keep up with growing demand in the region.

IFC is considering part-financing the project.

“The proposed investment from IFC is a financing package of loans to finance part of the project, which is estimated to cost approximately $480 million,” IFC said.

The project will help increase the throughput of the refinery by about 25 per cent with a relatively smaller investment of about 15 per cent of its capital cost.

HMEL, a joint venture between state-owned Hindustan Petroleum Corp Ltd (HPCL) and Mittal Energy Investments Pte Ltd (a member of the L N Mittal group), built the refinery at Rs 21,500 crore cost. HPCL and Mittal Energy hold 49 per cent stake each in HMEL, while the remaining 2 per cent is with financial institutions.

The refinery, which was formally inaugurated by Prime Minister Manmohan Singh in April, “processes lower grade crude to produce higher value petroleum products catering to demand in the northern part of the country,” IFC said.

HMEL may think of raising the capacity to 18 million tonnes at a later date.

The refinery has land to double unit’s capacity in future.

Also, the 1,017-km cross-country pipeline that transports imported crude oil from Mundra, in Gujarat, to the refinery, has a capacity to carry 18 million tonnes a year of crude.

The unit is configured to meet the demand of north India, which currently has a demand of 40 million tonnes of petroleum products. Against this, supplies for units in north are only 25 million tonnes annually.

Of its total produce, diesel would constitute 40 per cent, while gasoline or petrol would be about 10 per cent. LPG would be 8 per cent and it will not produce any fuel oil.