NEW DELHI: Bharat Petroleum Corp Ltd has mandated SBI Capital Markets to arrange a Rs 31,000 crore loan for the planned capital expenditure at its Bina refinery complex located in Madhya Pradesh, according to people familiar with the matter.
Several local banks and financial institutions are expected to take up portions of the loan that could have a tenor of 15 years, they said. The expansion at Bina was announced in May last year with the foundation stone laid by Prime Minister Narendra Modi in September.
The total project cost is estimated at Rs 48,000 crore. The loan will cover a major portion of the project cost while the rest of the funding will come from BPCL as equity infusions. BPCL didn’t respond to queries. SBI Caps declined to comment.
India aims to fill global refining capacity shortages that have emerged due to the shutdown of unviable refineries in the aftermath of Covid-19. The Bina refinery was originally formed as a joint venture between state-owned BPCL and Oman Oil in 1994. It became a wholly owned subsidiary of BPCL in 2021.
Refining Boost
Once the new capacity is added, the refinery will be able to process 12 million metric tonnes of crude per year, up from the current 7.8 million metric tonnes per annum. The capital expenditure plan also includes the establishment of an ethane cracker to break down natural gas to produce industrial chemicals such as ethylene, used in plastics manufacturing.
The setting up of the ethane cracker unit will encourage downstream industries in plastics and packaging in Madhya Pradesh, petroleum minister Hardeep Singh Puri had said at the foundation stone-laying ceremony, as per a government release.