PFC and REC Ltd to Provide Over USD 1.6 Billion Loan for New HRRL Refinery Cum Petrochemical Complex in Rajasthan

PFC (Power Finance Corporation) Ltd and its subsidiary REC Ltd have agreed to provide a loan facility amounting to over USD 1.6 Billion (INR 13972 crores) for setting up a new greenfield refinery cum petrochemical complex in Barmer district in south-western Rajasthan.

Background and Objectives of the project

The greenfield project to set up a 9 Million Metric Tonnes capacity refinery cum petrochemical complex in Barmer District of Rajasthan was first conceived in 2008 and approved in 2013. However, the project started only in 2018 after reconfiguration to the original planning. The total project is developed by HRRL (HPCL Rajasthan Refinery Ltd.), a joint venture between HPCL (Hindustan Petroleum Corporation Limited ) and the state government of Rajasthan on an equity split of 74:26 respectively.

As per the official statement by the Union Minister for Petroleum and Natural Gas Shri Hardeep Singh Puri, more than 60% of the work on the complex has been completed, and once fully operational, it will process 9 MMTPA of crude and produce more than 2.4 million tons of petrochemicals. The operation of the complex will significantly reduce the import bill on petrochemicals. As per the minister, the current import bill which stands close to USD 12 Billion per annum may reduce to USD 3-3.5 Billion once the HRRL complex starts functioning. 

Furthermore, it is estimated that the complex will generate revenue worth USD 600 Million for the Rajasthan state government and will further help in exports of petrochemical products worth USD 1.5 Billion. The official press release states that the HRRL complex will also help set up other Petchem downstream Small-Scale Industries using petrochemical feedstock generated from the complex. 

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The petrochemical complex will be fully energy-efficient & environment-friendly with an annual capacity of 9 Million Metric Tonnes. It will also have a pipeline for the transportation of water to the refinery site, crude and product storage facilities, a power plant for meeting the power and steam requirements, an associated township, and other facilities and utilities.

Cost of the project

The total cost of the whole project is believed to be around USD 9 Billion (INR 72937 crore) of which USD 6 Billion (INR 48,625 crores) will be raised through a consortium arrangement. Under this arrangement, PFC Ltd and REC Ltd have agreed to provide 1.6 Billion in loans. This is the first major non-power project where PFC is providing loans. Earlier the central PSU mainly focussed on financing power projects across India. 

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