Hindustan Petroleum Corporation Limited (HPCL) has refinanced about ₹50,000 crore of debt linked to its Rajasthan refinery, reducing borrowing costs by around 105 basis points as the company prepares to move the facility towards full operations by December. The restructuring is expected to reduce annual interest costs by about ₹470 crore to ₹550 crore, while broader financial measures could generate savings of nearly ₹1,000 crore a year.
HPCL Chairman and Managing Director Vikas Kaushal disclosed the details during an earnings call. The refinancing took effect on October 3 and forms part of a wider effort to improve the economics of the 9-million-tonne-a-year refinery at Pachpadra in Rajasthan’s Balotra district.
The refinery was built at a cost of ₹79,459 crore and is owned through HPCL Rajasthan Refinery Limited (HRRL), a joint venture in which HPCL holds a 74 per cent stake and the Government of Rajasthan owns the remaining 26 per cent. The project’s financing burden is also being reduced through equity infusions, the conversion of subordinated loans into equity and interest-free support from the state government.
HRRL has partially refinanced its existing project loans through ₹8,000 crore in rupee term loans from a consortium comprising the National Bank for Financing Infrastructure and Development, India Infrastructure Finance Company Limited, ICICI Bank, UCO Bank and Punjab & Sind Bank. It has also secured a ₹2,000-crore working capital demand loan from Bank of Baroda and credit facilities totalling ₹400 crore from ICICI Bank.
The term loans will be used to refinance part of the refinery’s existing project debt. The working capital facilities will support HRRL’s operating requirements and help manage cash-flow mismatches linked to the refinery, allied utilities and other facilities at Pachpadra.
The Rajasthan government infused ₹1,500 crore into the refinery as equity during the September quarter. HPCL also converted ₹4,300 crore of subordinated loans into equity, a step Kaushal said would lower interest costs by about ₹350 crore. Further equity calls are planned over the next one or two quarters. The state has additionally committed to providing about ₹1,100 crore annually through interest-free loans, with the first instalment already received.
The refinery’s commercial operation date was declared on June 22, and it is currently operating at about 60 per cent utilisation. Almost all secondary processing units are in hot circulation, while two units are still to reach that stage. HPCL expects to complete the remaining commissioning work, including the sulphur recovery unit, before increasing output.
Kaushal said the refinery is expected to reach a throughput run rate of 8 million to 9 million tonnes a year around December, subject to a variation of one or two weeks. The facility recorded a gross refining margin of about $12 per barrel in the September quarter. HPCL expects margins to exceed $20 per barrel in the fourth quarter as the refinery moves towards processing higher-sulphur crude, for which it was designed.
Product shipments have also begun to increase. The refinery shipped about 15,000 tonnes of products on the day before the earnings call, compared with no shipments three months earlier. October shipments are expected to exceed 400,000 tonnes and generate more than ₹4,000 crore in revenue during the month.
Kaushal said the refinery could record a positive monthly profit before tax in October, while clarifying that this reflected management optimism rather than formal guidance. HPCL’s immediate milestones are the completion of remaining commissioning work, the increase in utilisation and the transition towards the targeted 8-million-to-9-million-tonne annual throughput run rate around December.
