HPCL may raise $500 million via bond issue

HPCL is planning to modernize its refinery in Visakhapatnam and expand its capacity from the existing 8.33 mtpa to 15 mtpa


Last year, HPCL said it planned to invest Rs45,000 crore by 2020 to expand  its Mumbai and Visakhapatnam refineries and  augment its marketing infrastructure. Photo: Mint
Last year, HPCL said it planned to invest Rs45,000 crore by 2020 to expand its Mumbai and Visakhapatnam refineries and augment its marketing infrastructure. Photo: Mint

Mumbai: State-run oil company Hindustan Petroleum Corp. Ltd (HPCL) is planning to raise $500 million through a bond issue shortly, two people aware of the development said. 

“HPCL is executing its expansion plans and needs cash for the same. Given HPCL’s performance, its issue would get subscribed in a day,” said one of the two mentioned above, on condition of anonymity. 

“The fund raise is basically for the Vizag refinery expansion and to complete some pipeline projects,” an HPCL official said, also on condition of anonymity. 

The company is planning to modernize its refinery in Visakhapatnam and expand its capacity from the existing 8.33 million tonnes per annum (mtpa) to 15 mtpa, besides starting work on upgrading fuel quality to Bharat stage-VI.

 “With objective to minimize the bottoms and improve the margins, the proposed configuration considers state-of-the-art bottom up-gradation unit,” HPCL says on its website. 

A HPCL spokesperson did not reply to an email sent on 3 February. Last month, HPCL received shareholders’ approval for a private placement of Rs60 billion redeemable non-convertible debentures to finance its expansion plans.  

HPCL is building two liquified petroleum gas (LPG) pipelines—the 397-km Mangaluru-Hassan-Mysuru-Bengaluru pipeline and the 168-km Uran-Chakan/ Shikrapur pipeline. They aim to reduce use of gas tankers, improve  safety and reduce logistics costs.

Last year, HPCL said it planned to invest Rs45,000 crore by 2020 to expand its Mumbai and Visakhapatnam refineries and augment its marketing infrastructure.

While Rs21,000 crore would be invested in refining capacity expansion, Rs9,000 crore would be spent in marketing infrastructure till 2020. A total of Rs14,000 crore would go into joint venture refinery projects, natural gas business and upstream oil exploration, the company had said last March.

Aside from its projects, HPCL along with Gail (India) Ltd, is also planning to set up a cracker unit, used to produce high-value petrochemical by-products, at Kakinada, Andhra Pradesh on the east coast at an estimated investment of Rs40,000 crore.

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