Mumbai: Hindustan Petroleum Corporation Ltd (HPCL) has announced the financial closure of Guru Gobind Singh Refineries Ltd. (GGSRL), its joint venture with Mittal Energy Investments Pte. Ltd, Singapore, for setting up a 9 MMTPA greenfield refinery at Bathinda in Punjab.

A consortium of 26 lenders led by the State Bank of India have committed a 14-year project finance term loan aggregating to Rs7,800 crore to Guru Gobind Singh Refineries Ltd. (GGSRL).

The transaction is one of India''s largest syndicated project finance deal and the lenders to the project include SBICAP, Allahahad Bank, Andhra Bank, Bank of Baroda, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Indian Bank, Oriental Bank of Commerce, Punjab National Bank, Punjab and Sind Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of India, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, State Bank of Travancore, Syndicate Bank, The Federal Bank, Union Bank of India, United Bank of India, UCO Bank, Vijaya Bank and the Life Insurance Corporation of India (LIC).

SBI Capital Markets Ltd. (SBICAP) is the sole financial advisor and arranger for India''s largest FDI under public/private partnership. The syndication was over subscribed by Rs800 crore.

GGSRL is a joint venture between HPCL and Mittal Energy Investments Pte Ltd Singapore. The money will be used to construct a 9MMTPA greenfield refinery at Bhatinda in Punjab.

The project , which has a debt- equity ratio of 1.5:1 , envisages an outlay of Rs13 ,789 crore. HPCL and Mittal Investments will be equal partners in the venture (49 per cent each). The remaining 2 per cent will be raised from financial i Investors.

The entire debt is designated in Indian rupee. Flexibility has been provided to change the financing mix during the construction period to suit the project requirements. The financing for this project is being done in one tranche.

"The Indian economy is seeing sustained growth. The demand for energy is expected to rise steadily over the years in sync. It is estimated that the demand for retail petroleum products (MS and HSD) will grow at around 5-6 per cent in next 10-15 years. We have to build-up capacities to meet this requirement. This project aims to meet this growing demand. Partnering with SBICAP strengthens the project as they have rich expertise in structuring such deals." said C. Ramulu, director finance, Hindustan Petroleum Corporation Limited.

"It is a privilege to be a part of country''s largest FDI under public/private partnership project. The northern region of the country is the largest and fastest growing market and is facing large demand-supply mismatch of petroleum products. With the commissioning of the Bhatinda refinery, this mismatch will be reduced". R. Sridharan, CEO&MD, SBI Capital Markets, said.

The refinery will commence production from January 2011, and will produce petroleum products compliant with Euro IV emission norms. As the refinery will have a Nelson Complexity Index of 9.6, it will be in a position to process a variety of crudes and also produce petrochemical products.