New Delhi: India’s Oil and Natural Gas Corp.is looking to raise up to Rs70 billion ($1.65 billion) over the next six months to fund the expansion of its Mangalore refinery, its chairman said on 16 April.
The project will raise the refinery’s capacity to an annual 15 million tonne by 2010. “We are talking to various bankers to borrow Rs60-70 billion for Mangalore refinery expansion. In the next six months, we have to tie up the funds,” the firm’s chairman, R.S. Sharma, told reporters.
Sharma said India’s top state-run explorer planned a capital expenditure of 180 billion rupees for the year to March 2008, up from 150 billion rupees the year before.
“Of this, exploration is one-third or about 50 billion rupees. The remaining will be largely invested for various enhanced oil recovery or improved oil recovery schemes,” he said.
Shares in the company were trading 2.2 percent higher at 890.80 rupees in a firm Mumbai market.
On ONGC’s plans to set up a new 300,000 barrels per day refinery in southern India, Sharma said a feasibility report should be completed in the next 2-3 months.
State-run project consultant Engineers India Ltd. <ENGI.BO> and investment banker SBI Capital Markets Ltd. were working on project details, he said.
“The project should take off first, and then we will go for an IPO, which may take 2-3 years,” Sharma said.
The new refinery is expected to be set up through a special purpose vehicle owned by ONGC arm Mangalore Refinery and Petrochemicals Ltd. <MRPL.BO>, which will hold a 46 percent stake.
“But we think MRPL’s balance sheet cannot take 46 percent because of its debt-equity structure and size of reserves, so at a later date we have to work on this,” Sharma said.