India's public sector oil refining and marketing giant, Indian Oil Corporation Ltd.(IOC) has arranged a term loan of Rs14,900 crore for its prestigious Paradip refinery project in Orissa from a consortium led by the State Bank of India (SBI).

The term loan arranged solely by SBI Capital Markets Ltd. is from 21 lenders including 19 public sector banks, the Life Insurance Corporation of India (LIC) and the Housing and Urban Development Corporation Ltd. (HUDCO). It will have a tenure of 14 years and will be disbursed over a period of three years.

''Indian Oil has signed a rupee term-loan agreement for Rs14,900 crore with a consortium of 21 lenders led by the SBI'' IOC informed the stock exchanges on Thursday. ''This is the largest syndicated rupee term loan arranged so far in Indian debt market for a single project," it said.

The loan will be provided based on ''floating interest rates'' and analysts believe that IOC will benefit from the interest rate cuts announced by the central bank since last October, as a measure to increase liquidity to tide over the global economic crisis.

The loan proceeds shall be used for setting up of the 15 MMTPA (million metric tonnes per annum) grass root refinery on the eastern coast of Orissa at a total cost of Rs33,504 crore. Total funding of the project is envisaged through a combination of rupee loans, foreign currency loans and internal accruals.

IOC is India's largest oil refining and marketing company, controlling ten of the twenty oil refineries in the country, and has a total refining capacity of 60.2 MMTPA (1.2 million barrels per day) including its group companies, accounting for about 34 per cent of the nation's capacity. Commissioning of the Paradip refinery will be a giant leap towards achieving IOC's set target of 80 MMTPA (1.6 mbpd) by 2012. 

The company has recently split the Paradip project into two: the oil refinery and the petrochemical complex, with the oil refinery scheduled to go on stream first.

The refinery is designed to handle heavy and sour grades of crude oil which are relatively cheaper in the international market. The Nelson complexity index, which is a measure of secondary conversion capacity of a petroleum refinery to the primary crude distillation capacity, will be 15 for the Paradip refinery, making it one of the most complex refineries in the world. For comparison, the average complexity index is 9.5 for the US refineries and 6.5 for Europe. The Jamnagar refinery of Reliance Industries has a complexity index of 14.

IOC's major refineries include Koyali (13.7 MMTPA), Panipat (12 MMTPA which is being expanded to 15 MMTPA), Chennai (9.5 MMTPA), Mathura (8 MMTPA), Haldia (6 MMTPA), Barauni (6 MMTPA) and Bongaigaon (2.35 MMTPA). In addition, the company has a wide network of over 17,600 distributors across the country and also owns over 10,000 km of cross-country pipelines.

IOC shares rose 2.46 per cent yesterday to Rs434.50 on the Bombay Stock Exchange, while the benchmark BSE Sensex closed 1.22 per cent lower.

The company has a current market capitalisation of Rs51,808 crore.