Hindustan Petroleum Corporation Limited (HPCL), an integrated oil and gas company, signed a memorandum of understanding (MoU) to form joint venture with Rajasthan State Refinery Limited, a state owned company, to set up oil refinery and petrochemical complex in Barmer, Rajasthan, India.
Earlier, on March 14, 2013, HPCL entered into memorandum of understanding with Rajasthan State Refinery which was now terminated by the Government of Rajasthan.
Under the terms of the new MoU, HPCL will hold 74% stake and Rajasthan State Refinery will hold the remaining 26% stake in the joint venture. The refinery will produce BS-VI emission norms compliant fuel. When compared to the previous agreement, the estimated cost of the project increased from INR372,300 million (MM) (US$5,765.07 MM) to INR431,290 MM (US$6,678.53MM); the state’s monetary support to the project decreased from INR38,710 MM (US$599.43 MM) to INR37,380 MM (US$578.83 MM); and a viability gap funding (VGF) decreased from INR37,360 MM (US$578.52 MM) to INR11,230 MM (US$173.9 MM). The total proposed VGF decreased from INR560,400 MM (US$8,677.81 MM) to INR168,450 MM (US$2,609.85 MM).
The refinery-cum-petrochemical complex will have the capacity of 9 mtpa, and is expected to be operational within four years. To run the refinery, half of the crude oil will be supplied by Barmer oilfields of Cairn India Limited, while the rest will be imported. The refinery-cum-petrochemical complex is designed to produce motor fuels with latest environmental specifications and wide range of petrochemicals which will have a substantial impact on the economy of Rajasthan.
In a filing to the stock exchanges, HPCL stated, "HPCL Board at its meeting held today has approved resumption of Rajasthan refinery project and signing of revised MoU with the Government of Rajasthan for implementation of the project.”
Dharmendra Pradhan, oil minister of India, said, "The fiscal package negotiated by the previous (Congress) government had put a big burden on Rajasthan. Now, that has been balanced."