A Hyderabad-based company is setting up a 7.5-million tonne capacity oil refinery project in the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) on the Andhra seacoast by relocating a refinery of the same capacity from the US.
The running refinery, located near New York city, has been acquired at $505 million (Rs 2,575 crore) and will be installed on a turnkey basis by the American Industrial Corporation (AIC), according to Syed Badruddin, chief promoter and chairman of Amerind Petroleum Private Limited, which proposes to own 16 per cent of the promoter holding in the refinery.
The entire loan funding of $404 million (around Rs 2,060 crore), which is 80 per cent of the total project cost, will come from the US Exim Bank, he said. Of this, $375 million (around Rs 1,912 crore) would go towards the cost of the project in the US and the rest would be utilised for implementation of the project in India.
State major industries minister J Geeta Reddy said an MoU with the company to this effect was signed on Thursday under which the government had agreed to provide 700 acre land in addition to other policy incentives under the mega project category for project facilitation.
The 20 per cent equity, which is $101 million, is proposed to be raised from various sources, including public issue. “Various banks, institutional investors and PE funds along with promoters will together bring in 51 per cent of the equity. The remaining equity will be raised from public issue that will be timed after the project starts commercial operations,” Badruddin told the media.
The project would be instantly viable as the existing refinery has been bought for just a fraction of what it would cost to build a new refinery and was being funded at a low rate of 3.51 per cent interest by the American Exim Bank, he said.
The company proposes to import crude oil from West Asia and market the finished products partly in India through a dedicated chain of outlets and export the rest. The project is expected to be implemented in 30-36 months after it receives all the statutory clearances.
The company also has plans for second phase development to take the total refining capacity of the project to 15 million tonnes, according to the minister.
Responding to a question, TS Appa Rao, principal secretary, industries department, said HPCL had been identified as the anchor client for the AP PCPIR region by the Centre and would continue until otherwise stated.
