Mumbai: The Guru Gobind Singh refinery at Bathinda, Punjab, has tied up $2 billion dollars in funds to increase its refining capacity to 18 million metric tonnes per annum (mmtpa) and set up a petrochemical complex, two people aware of the development said.

The Bathinda refinery is run by HPCL-Mittal Energy Ltd (HMEL), a joint venture between Hindustan Petroleum Corp. Ltd and Mittal Energy Investments Pvt. Ltd, Singapore.

HPCL and Mittal Energy Investments hold 49% stake each in the venture, with financial investors owning the rest.

“Bathinda refinery is funding the expansion through a combination of equity and debt syndication by banks. A consortium of 12 domestic banks, led by SBI Capital Markets, has facilitated the fund raise for Bathinda refinery. The refinery has begun executing the expansion plan," said the first person mentioned earlier, who is a banker. He spoke on the condition of anonymity as he is not allowed to speak to the media.

HMEL did not reply to an email sent on 11 August.

Bathinda refinery’s petrochemical unit is part of the refinery’s expansion program. HMEL is currently expanding the capacity of the refinery from 9 mmtpa to 11.5 mmtpa, raising refinery throughput by about 25%. After the target is reached, the capacity would be eventually raised to 18 mmtpa.

“The petrochemical complex would include a new naphtha cracker," said the second official aware of the development, also on the condition of anonymity.

On 29 July, the oil ministry said that the government is planning to set up petrochemical clusters in eastern, western and southern India to spur growth of the sector with a view to meeting the increasing demand for polymers and specialty chemicals across diverse industrial segments.

“With the synergy of feedstock availability, public sector oil and gas companies have invested in a big way in world-scale petrochemical complexes, and will continue to do so," the ministry statement said, quoting oil minister Dharmendra Pradhan.

The ministry statement added that the $50 billion petrochemicals market in the country, is expected to grow 9% annually to reach 40 million tonne-a-year market with a revenue of $65-70 billion by 2019-20. Over the next decade, the petrochemicals market in India is expected to grow at a compounded annual growth rate of 1.5 times that of gross domestic product, according to petrochemical companies.

State refiners have a 230 million tonne-a-year refining capacity and a petrochemical production capacity of 915 million tonne-a-year, which are in the process of being expanded.