New Delhi: State-run Hindustan Petroleum Corp. Ltd (HPCL) on Tuesday signed an agreement with the Rajasthan government to set up a 9 million tonne joint venture refinery at a cost of Rs43,129 crore, a statement from oil ministry said.
HPCL will hold 74% equity in the joint venture, HPCL Rajasthan Refinery Ltd, while the state government will hold the balance.
The agreement signed in the presence of oil minister Dharmendra Pradhan and Rajasthan chief minister Vasundhara Raje entitles the company to a viability gap funding of Rs1,123 crore a year for 15 years from the year of commercial production. The funding will be in the form of an interest-free loan to be refunded in subsequent 15 years.
The project includes a petrochemicals complex too. The proposed refinery will be able to process local crude from Vedanta Ltd’s Barmer oil field in the state as well as imported crude. Vedanta, which recently merged its group company Cairn India Ltd with itself, is planning more investments into enhanced oil recovery from its Barmer assets.
Anil Agarwal, chairman, Vedanta Group had last December said the group was committed to investing Rs30,000 crore to add 100,000 barrels of oil and oil equivalent over the next three years, primarily from its prolific Rajasthan fields.
For the proposed refinery, the state has already allotted 4,800 acres at Pachpadra in Barmer. The statement said quoting Pradhan that construction work will begin in the current financial year and will be completed in four years. Separately, another deal was signed between Rajasthan State Gas Ltd and GAIL Gas Ltd for creating a city gas network in Kota district.
India is at present adding its refining capacity in line with growing energy requirement and with an ambition to emerge as a regional refining hub. State-owned refiners which supply autofuel to neighbouring markets like Bangladesh and Nepal are in the process of expanding their presence in these markets.