Hindustan Petroleum Corporation Ltd (HPCL) has refinanced about ₹50,000 crore of debt linked to its Rajasthan refinery, targeting annual interest savings of around ₹1,000 crore as the 9 million tonne-a-year facility moves towards full operations.
HPCL Chairman and Managing Director Vikas Kaushal said the refinancing, which took effect on October 3, reduced borrowing costs by about 105 basis points. The refinancing itself is expected to save the company between ₹470 crore and ₹550 crore annually, while additional equity infusions, loan conversions and interest-free state support are expected to deliver further savings.
The Rajasthan refinery, operated by HPCL Rajasthan Refinery Limited (HRRL), was built at a cost of ₹79,459 crore. HPCL holds a 74 per cent stake in the joint venture, while the Government of Rajasthan owns the remaining 26 per cent.
As part of the refinancing, HRRL raised ₹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 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 partly to refinance existing project loans. The working capital facilities will support HRRL’s operational requirements and help manage cash flow mismatches associated with the refinery, its allied utilities and facilities at Pachpadra in Rajasthan’s Balotra district.
Kaushal said HPCL had significantly altered the company’s debt structure as it works to improve the refinery’s economics. The Rajasthan government infused ₹1,500 crore into the project during the September quarter, while HPCL converted ₹4,300 crore of subordinated loans into equity. The conversion is expected to reduce annual interest costs by about ₹350 crore. Further equity calls are planned over the next one or two quarters.
The state government has also committed to providing about ₹1,100 crore annually through interest-free loans. The first instalment has already been received, according to Kaushal.
The refinery declared its commercial operation date on June 22 and is currently operating at about 60 per cent utilisation. Almost all secondary processing units are in hot circulation, with two units yet to reach that stage. The remaining commissioning work includes the sulphur recovery unit.
HPCL expects throughput to reach a run rate of 8 million to 9 million tonnes a year around December, subject to a variation of one or two weeks. The company said the refinery recorded a gross refining margin of about $12 a barrel in the September quarter and expects margins to rise above $20 a barrel in the fourth quarter as it begins processing higher-sulphur crude for which the facility was designed.
Product shipments have also increased as operations ramp up. 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 for 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 because refining margins remain volatile. HPCL’s next operational milestone is the completion of commissioning activities and the move towards an 8 million-to-9 million-tonne annual throughput run rate around December.
