Indian Oil secures Rs14,900 crore loan for Paradip refinery
15 May 2009
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.