India’s state-controlled refiner Bharat Petroleum Corporation Ltd (BPCL) is in talks with major local banks to secure a loan of about $3.8 billion which it will use to expand the capacity of one of its refineries, Bloomberg reported on Friday, quoting sources with knowledge of the discussions.
BPCL is looking to raise around $3.8 billion (320 billion Indian rupees) from lenders to boost the capacity of its Bina refinery in the Madhya Pradesh state in central India, according to Bloomberg’s sources.
The refiner has planned to invest a total of $5.8 billion (490 billion rupees) to add an ethylene cracker unit at the Bina refinery as BPCL and other Indian refiners are looking to raise their petrochemicals production capacities.
If BPCL obtains the loan from the local banks, this would be the largest loan in Indian rupees in the country so far this year, per data compiled by Bloomberg.
Bank of India, Punjab National Bank, and Bank of Baroda are some of the lenders with which the refiner is in talks for the loan, which is expected to have a 15-year maturity.
India has said it expects to raise its refining capacity by around 1.12 million barrels per day (bpd) each year until 2028 as it seeks to meet rising fuel demand. Total Indian refining capacity is expected to increase by 22% in five years from the current 254 million metric tons per year, which are equal to around 5.8 million bpd.
Separately, Indian state-held refiners have started jointly to discuss terms of a potential deal with Russia for long-term supply of Russian oil, a government source with knowledge of the matter told Reuters in July.
“Joint negotiations of state refiners with Russia are already happening,” the government source told Reuters.
India needs “predictable and stable” oil supplies amid expanding refining capacity, the source added.
By Tsvetana Paraskova for Oilprice.com
