SBI Caps to raise $3.6bn for Barmer refinery

Vol 17, PW 5 (03 Oct 13) Midstream & Downstream

State-owned merchant bank SBI Caps will soon have the daunting task of raising Rs22,338cr ($3.6bn) in loans for Hindustan Petroleum's revived 9m t/y refinery project at Barmer in Rajasthan.

Speaking to PETROWATCH at the refinery's foundation stone laying ceremony on September 22, a senior HPCL source confirmed plans to hire SBI Caps to help the proposed Barmer refinery reach financial closure. Setting up the Barmer refinery and adjacent petrochemicals complex is estimated to cost Rs37,230cr ($6bn).

Of this, HPCL’s (74%) equity contribution will be Rs11,020cr ($1.7bn) and Rajasthan state’s (26%) contribution will be Rs3872cr ($619m). An analyst with a leading international consultancy says SBI Caps has experience with large projects like the Dahej and Kochi LNG terminals and should not have problems raising funds.

“There is unlimited demand for this type of project," he adds. "HPCL raised $2.7bn in 23 days for the Bhatinda refinery.

These projects are easy to fund. India has a strong demand for energy and technological know-how.

” Our HPCL source adds it will also appoint Engineers India (EIL) as the Barmer Project Management Consultant. Within a month HPCL plans to take possession of 4800 acres set aside for the project.

“Six months after that we plan to begin constructing a compound wall, levelling the land and laying roads." adds HPCL.

"Actual construction will begin when contractors mobilise to site.”