Hindustan Petroleum Corporation Ltd (HPCL) has refinanced about ₹50,000 crore of debt linked to its Rajasthan refinery, cutting borrowing costs by around 105 basis points as the 9-million-tonne-a-year facility moves towards full operations. The restructuring is expected to reduce annual interest costs by about ₹470 crore to ₹550 crore immediately, while a wider package of equity support and interest-free state loans could take the annual savings to around ₹1,000 crore.
HPCL Chairman and Managing Director Vikas Kaushal disclosed the measures during an earnings call. The refinancing took effect on October 3 and is intended to improve the economics of the company’s major new asset at Pachpadra in Rajasthan’s Balotra district.
HPCL Rajasthan Refinery Limited (HRRL), the joint venture that owns the project, has raised ₹8,000 crore in rupee term loans from a consortium comprising the National Bank for Financing Infrastructure and Development, India Infrastructure Finance Company, ICICI Bank, UCO Bank and Punjab & Sind Bank. The proceeds will be used partly to refinance existing project loans.
The company has also secured a ₹2,000-crore working capital demand loan from Bank of Baroda and fund-based and non-fund-based credit facilities totalling ₹400 crore from ICICI Bank. These facilities will support working capital requirements and help manage cash-flow mismatches involving the refinery and its allied utilities.
The refinery was built at a cost of ₹79,459 crore. HPCL holds a 74 per cent stake in HRRL, while the Government of Rajasthan owns the remaining 26 per cent. The state government infused ₹1,500 crore into the project during the September quarter, while HPCL converted ₹4,300 crore of subordinated loans into equity. That conversion alone is expected to reduce interest costs by about ₹350 crore.
The state has also committed to providing approximately ₹1,100 crore a year in interest-free loans, with the first instalment already received. Further equity calls are planned over the next one or two quarters, according to Kaushal.
The financial restructuring comes as HRRL increases production after declaring commercial operations on June 22. The refinery is currently operating at about 60 per cent utilisation, with almost all secondary processing units in hot circulation. Two units remain to be brought into that state, while commissioning work, including the sulphur recovery unit, is continuing.
HPCL expects throughput to reach a run rate of 8 million to 9 million tonnes a year around December. Product shipments have risen from no shipments three months earlier to about 15,000 tonnes on the day before the earnings call. October shipments are expected to exceed 400,000 tonnes and generate more than ₹4,000 crore in revenue during the month.
The refinery recorded a gross refining margin of about $12 per barrel in the September quarter. HPCL expects margins to rise above $20 per barrel in the fourth quarter as the facility moves towards processing higher-sulphur crude, which it was designed to handle.
Kaushal said the refinery could record a positive monthly profit before tax in October, while stressing that this reflected management’s optimism rather than formal guidance because refining margins remain volatile. HPCL’s immediate milestones are the completion of the remaining commissioning work and the planned ramp-up towards full operating capacity by December.
