HPCL plans Rs75,000-cr capex to expand, modernise operations

State-run refiner and oil marketing company Hindustan Petroleum Corporation Ltd (HPCL) has embarked on a major expansion-cum-consolidation drive that involves a Rs75,000-crore capital expenditure over the next five years.

HPCL, now owned by state-run oil and gas explorer ONGC, said most of the investments will be in the Vizag, Barmer, Mumbai refineries and the Gujarat LNG terminal.
Reports quoting top officials of the ‘Navaratna’ oil PSU said the capex could see HPCL expanding and modernising its Visakhapatnam refinery in Andhra Pradesh enhancing the refinery capacity from the present 8.33 million metric tonnes per annum (mmtpa) to 15 mmtpa at a cost of Rs20,928 crore.
The project, which includes bottom upgradation facilities, will make the refinery capable of producing Bharat Stage VI (BS-VI) compliant motor fuels, which will become mandatory from 1 April 2020..
HPCL is also expanding its Mumbai refinery capacity from 7.5 mmtpa to 9.5 mmtpa at a cost of Rs5,060 crore.
HPCL is also setting up a 9 mmtpa greenfield refinery in Barmer, Rajasthan. The joint venture refinery will see the setting up of a 9 million-tonne integrated refinery and petroleum complex.
The Barmer project is being taken up as a 74:26 joint venture with the Rajasthan government and will require outlay of over Rs43,000 crore. Most of the clearances for the project are in place, including land and environment clearance.
HPCL is making significant investments in the production of BS VI fuels, and is a partner in the 60 mmtpa Ratnagiri Refinery and Petrochemicals Ltd in Maharashtra.
In addition to this, investments in pipeline projects and upcoming ventures are under various stages of completion. This project is being taken up through a 50:50 joint venture with the Shapoorji Pallonji Group.
The expansion plans will be funded through a combination of internal accruals, debt and other instruments, Ramaswamy said. There is also a possibility of raising funds overseas, he added.
Besides supply pipelines for various projects, HPCL is also interested in city gas supply networks, officials said.
HPCL has a current debt-equity ratio of 0.5:1 but there is potential for greater flexibility. For FY19, HPCL has sought shareholders nod to borrow Rs12,000 crore by selling debentures and bonds.
The company is exploring opportunities to grow its lubricants business across Asia, West Asia and Africa. To execute its plans, HPCL has formed HPCL Middle East FZCO, in the Dubai Airport Free Zone Area in the United Arab Emirates, and has also appointed a distributor in Myanmar to start sales.
The company plans to actively pursue current and future opportunities in the areas of refineries, petrochemicals, infrastructure, natural gas, bio-fuels, renewable energy and new age technologies.