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State-run oil refiner Hindustan Petroleum Corporation Ltd (HPCL) will raise ₹28,000 crore from a clutch of banks led by State Bank of India (SBI) to help fund the construction of a greenfield refinery and petrochemical complex in Rajasthan’s Barmer district.
“We have mandated SBI Caps to arrange the funds and mostly SBI will be the lead financier,” J Ramaswamy, Director (Finance), HPCL, told BusinessLine .
The 9 million tonnes per annum (mmtpa) refinery and petrochemical project will cost ₹43,129 crore and is funded on a debt-equity ratio of 2:1. HPCL has invested ₹600 crore in the project, which is slated for completion by 2022.
“In another three weeks, we should be doing the financial closure for the project,” HPCL CMD Mukesh Kumar Surana, said.
“We don’t need the money immediately. But, we will do the financial closure for the full project to ensure that we are tied up on all the angles and we will draw the money as and when we need. It will be a combination of multiple instruments- we will have domestic funding, external commercial borrowings (ECB), bonds, which-ever way we want it. There is a flexibility to use the instrument the way the project progresses,” Surana said.
“Whenever this sort of tie-ups are there, mostly you arrange in rupees in the initial stage with a carve out and get into other currency markets later. Once the financial terms are concluded, then we know how to proceed. And, as the project cash flow starts, we can take a call whether to go domestic or abroad, then collect the multiple types of instruments available,” Ramaswamy said.
The Barmer project will be India’s first grass-root refinery and petrochemical complex capable of producing BS-VI-compliant fuels right from inception. It will help HPCL raise its own refining capacity from 15.8 mt, though it’s refineries process 18 mt, operating at more than 100 per cent utilisation.
“Our refining capacity has been trailing our marketing capacity,” Surana said adding that HPCL was targeting a marketing capacity of 50 mt. It currently sells 37 mt.
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