GGSRL- A Joint Venture of HPCL and Mital Investment achieves financial closure

abarrelfullabarrelfull wrote on 07 May 2012 06:12
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27th July, 2007

The Transaction

A Consortium of 26 lenders led by the State Bank of India have on 27th July, 2007 committed a 14 year project finance term loan aggregating approximately Rs. 7,800 Crores to Guru Gobind Singh Refineries Ltd. (GGSRL), a joint venture of Hindustan Petroleum Corporation Limited (HPCL) and Mittal Energy Investments Pte. Limited, Singapore for setting up a 9 MMTPA Greenfield Refinery at Bathinda in Punjab.

About HPCL

HPCL is one of the three major downstream Oil “Navratna” companies engaged in refining, marketing & distribution of petroleum products in India. HPCL owns two refineries with a wide network of distribution and marketing infrastructure & network throughout the country.

About Mittal Energy Investments Pte. Limited

Mittal Energy Investments Pte. Ltd. is a 100% subsidiary of Mittal Investments S.a.r.l., registered in Singapore. Mittal Investments is a holding company of the LN Mittal group, which holds a major equity interest in Arcelor Mittal (the World’s Largest Steel Company) as well as in other ventures of the Mittal Group.

The Project

The consumption of petroleum products in India is growing and has now reached a stable growth rate of about 5% p.a. The consumption of petroleum products has gone up from about 30.8 MMT in the year 1980-81 to 119 MMT in 2006-07. Further, with the sustained growth in the Indian economy, the demand for energy is expected to rise steadily over the years. It is estimated that the demand for Retail Petroleum Products (MS and HSD) will grow at around 5-6% in next 10-15 years. The gap between HPCL’s Market Share and refining capacity is currently met from other refiners or through imports.

The northern region of the country is the largest and fastest growing market and there exists a large demand- supply mismatch - with the current demand far outstripping the supply. The proposed refinery will primarily market its products in the northern parts of the country and will have a significant advantage vis-à-vis refineries located in the western part of the country. As such, not only will GGSRL meet the growing demand for petroleum products in the region, but it will also afford economic benefits, which gives GGSRL a competitive edge over other refineries. HPCL will market the product of GGSRL under a product off take agreement.

The entire land for the Project has already been acquired and all the requisite permits and approvals have already been obtained (the site is suitably located far away from environmentally sensitive areas such as forests, wild life sanctuaries and national monuments). The construction work for the refinery has already begun and will take 4 years to complete. The refinery will produce petroleum products complying with Euro IV emission norms. As the refinery will be in a position to process a variety of crudes including very high Sulphur Crudes / Opportunity Crudes and will produce petrochemical products, it will have a high Nelson Complexity Index of 9.6.


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