Reliance Petroleum to raise $1.5bn loan to finance refinery project

Reliance Petroleum Ltd (RPL), an auxiliary company controlled by Reliance Industries Limited (RIL), has said today(Friday) that it has asked its bankers to arrange $1.5 billion (nearly Rs 6,900 crore) syndicated term loan facility to finance its 580,000 barrels per day (BPD) refinery and the 0.9 million tonne per annum polypropylene unit.

RIL, an organization of 14 lead managers, headed by Mukesh Ambani will solicit banks around the globe to participate in what the company said will be India’s largest-ever offshore syndicated loan financing.

"The loan facility comprises of $950 million 7.5 year tranche and a $550 million 10-year tranche with a blended average life of 6.6 years," RPL said in a statement in New Delhi.
This syndicated loan facility of worth $1.5 billion will be also the single largest limited recourse financing commanded in the Asian markets in recent years, except China.

This agreement will also help to re-open the limited recourse finance market in the country after almost a decade which has not witnessed meaningful cross border participation by international banks, the company said.

The new project will be settled in a Special Economic Zone (SEZ) adjoining to RIL's current refinery in Jamnagar, Gujarat. Earlier, RPL had proposed an initial public offer for the same project in April this year.

The Rs. 27,000-crore refinery project is likely to boost mutate India from a net importer to an overall exporter of petroleum products, with target export markets including Europe, the United States and the Far East.

Once the recent 580,000 bpd refinery unit is completed by December 2008, the net capacity for the RIL-RPL Jamnagar site will be over 1.2 million barrels per day, making it the world's largest petroleum refinery installation.

Besides doubling the petroleum refinery at Jamnagar Reliance is also introducing a state-of-the-art, pan-India petroleum retail network targeted at providing the Indian consumer with world-class retail experience.

The Reliance Group founded by Dhirubhai H. Ambani is India's largest business house with total revenues of more than Rs. 99,000 crore (US$ 22.6 billion), cash profit of Rs. 12,500 crore (US$ 2.8 billion), gross profit of Rs. 6,200 crore (US$ 1.4 billion) and exports of Rs. 15,900 crore (US$ 3.6 billion).

The Group's activities stretch exploration and production (E&P) of oil and gas, refining and marketing, petrochemicals (polyester, polymers, and intermediates), textiles, financial services and insurance, power, telecom and infocom initiatives.