Chennai Petroleum Corporation is in discussions with banks to secure a ₹28,000 crore ($3.3 billion) loan for constructing a large-scale oil refinery in southern India, according to sources familiar with the matter. The loan, which would be the second-largest local-currency financing in India this year, is expected to be led by the State Bank of India (SBI).
The funds will support the development of a proposed 9 million-ton-per-year refinery in Tamil Nadu, with an estimated total cost of ₹33,000 crore. The project, once approved by the federal government, is projected to take 36 months to complete, as stated by Chennai Petroleum’s Finance Director Rohit Agrawala in April.
Indian Oil Corporation, the majority owner of Chennai Petroleum, is leading the expansion to meet surging domestic demand for fuel products like diesel and gasoline. Refining capacity globally is shrinking in the US and Europe, but India represents a growth market-its neighbors like China are putting more emphasis on petrochemicals as transport is cleaned up.
Chennai Petroleum also lists National Iranian Oil Co. as an investor, through the 15.4% stake held by its subsidiary Naftiran Intertrade Co. Ltd. of Tehran. Indian Oil will have a 75% stake in the new Cauvery Basin refinery, while Chennai Petroleum will own the remainder. SBI Capital Markets is the loan syndication adviser.
An oil refiner could also take out the year’s biggest local-currency loan, with Bharat Petroleum Corporation reportedly in talks to raise ₹32,000 crore ($3.8 billion) for its own expansion.
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Source: Moneycontrol
News Desk
