HPCL to Raise $300 m to Fund Expansion

Co’s conducting road shows for the capital-raising exercise

SHUCHI SRIVASTAVA MUMBAI

    Hindustan Petroleum Corporation (HPCL) is planning to raise $300 million in the second half of the current fiscal and has appointed Bank of Tokyo-Mitsubishi, State Bank of India and Sumitomo Mitsui Banking as advisors. “We are currently conducting road shows and this capital raising exercise of $300 million with a greenshoe option is to primarily fund expansion activities at our existing refineries and our new refinery projects,” said B Mukherjee, director, finance, HPCL.
HPCL is planning to build a new 9-15 MTPA greenfield refinery project at Ratnagiri, Maharashtra. “We have identified 3,000 acres in the Lote-Parshuram industrial area in Chiplun, Konkan district in Ratnagiri and are yet to begin work as we are waiting for the state government to grant us clearances for land allocation,” K Murali, director, refineries, HPCL, had earlier told ET.
The company is also in the process of reviving its $10 billion refinerycum-petrochemical project at Visakhapatnam, and is in talks with various firms, such as Mittal Energy, to enter into a joint venture partnership. Separately, Mukherjee said that HPCL has received its share of the additional cash compensation promised by the government for losses incurred on selling subsidised fuel in third and fourth quarters. “We have received our share of Rs 4,500 crore in three tranches this month,” he said.
In May, the government had agreed to provide . 20,000 crore as compensation for revenue losses suffered by state-run oil marketing companies for selling diesel, domestic LPG and kerosene below market rates. On the refinery end, HPCL is currently battling a crude supply crisis as its oil supplies from Iran have been disrupted because Tehran is insisting on resolving a seven-month old payment row.
“We have not got our regular allocation from Iran for the month of August because of the payment issue and we have contracted an extra cargo from Saudi Arabia,” said Murali.
“We do not foresee a major disruption as we have signed term contracts for crude oil supply with Iraq, Kuwait and Abu Dhabi,” he said. HPCL has a term deal with National Iranian Oil Company to annually buy 70,000 barrel per day (bpd) of oil. Iran is India’s second-biggest oil supplier after Saudi Arabia. India imports around 4 lakh bpd, or 12%, of its daily requirement from Iran.
High Ambitions
• HPCL is planning to build a new 9-15 MTPA greenfield refinery project at Ratnagiri

• It is also in the process of reviving its $10 billion refinery-cum-petrochemical project at Visakhapatnam

• HPCL has received its share of the cash compensation promised by the government for losses incurred on selling subsidised fuel in Q3 and Q4