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Bharat Oman Refineries (BORL), a joint venture between Bharat Petroleum Corporation (BPCL) and Oman Oil, has gone in for refinancing multiple loans to the tune of Rs 5,000 crore to make debt-servicing easier for the company.
A consortium of 12 banks have re-financed BORL’s debt. These include the State Bank of India (SBI), Bank of India, Exim Bank, Canara Bank, and Oriental Bank of Commerce. A banker involved in the deal said SBI got the lion’s share in re-financing. “This loan facility will infuse fresh equity into the refinery, helping it perform better,” said a banker. The tenure of the loan has been extended to 12 years from five years. The loan rate is 9.5 per cent.
Last December, the Reserve Bank of India (RBI) had eased the norms for structuring existing long-term project loans to infrastructure and core industries in order to revive stalled projects and help banks tide over mounting bad loans.
Confirming the development, a senior BPCL executive said: “BORL's performance has been under pressure. This refinancing facility will help BORL make its debt servicing easy.”
For nine months ending December 2014, Bina refinery had posted a loss of Rs 1,200 crore and a gross refining margin of $2.5 a barrel.
For the October-December 2014 quarter, the refinery had posted nil gross refining margins and a loss of Rs 590 crore owing to heavy inventory losses. During the third quarter, BPCL posted an inventory loss of Rs 2,500 crore. Its net profit for the period stood at Rs 551 crore.
BORL — jointly owned by BPCL (49 per cent), Oman Oil Co (26 per cent), and financial institutions which hold the remaining stake — was commissioned in May 2011.
Boilers at the refinery were not running continuously hindering its continuous run impacting the average margins. However, BPCL said these issues had been dealt with and the refinery was operating beyond 100 per cent.
This January, BPCL said it would raise the capacity of Bina Refinery from six million tonnes per annum (mtpa) to 7.8 mtpa at an estimated cost of Rs 3,500 crore. The company is in the process of obtaining environmental clearances for the project. In this connection, BORL has sought incentives such as interest free loans and exemption from Central sales tax and entry tax from the Madhya Pradesh government.
The company is also discussing a possibility of further expansion to 15 mtpa, which might require an investment of Rs 18,000-20,000 crore.
In January, BPCL had said it would raise $2 billion (Rs 12,429 crore) through medium-term notes to finance its capex initiatives.
A COLLECTIVE MOVE
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A consortium of 12 banks have re-financed BORL’s debt
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These include the State Bank of India, Bank of India, Exim Bank, Canara Bank, and Oriental Bank of Commerce
- The tenure of the loan has been extended to 12 years from five years. The loan rate is 9.5%
