RPL to set up refinery in SEZ to cash in on global demand

Jamnagar, Mar 18 (UNI) The newly founded Reliance Petroleum Limited (RPL), the wholly owned subsidiary of Reliance Industries Limited (RIL), will set up the first export oriented refinery-cum-petrochemicals plant here in Gujarat at an investment of Rs 270 billion (Rs 27,000 crore) by December 2008 to cash in on the growing global demand.

The plant will have a crude distillation capacity of 580 Kilo barrels per stream day and polypropylene plant of 0.9 million metric tonnes per annum, sources at Reliance Petroleum Limited, the start up company formed to set up the greenfield refinery and petrochemicals project at the SEZ, told a visiting media team last night.

The new plant will come up adjacent to RIL's existing 6.6 lakh barrels per day refinery and petrochemicals complex with assets of over Rs 806 billion.

RPL has proposed to fund the project through debt of Rs 157.5 billion and equity of Rs 112.5 billion. Any additional equity raised in excess of Rs 112.5 billion will be used as additional contingency for the project.

RPL has already entered into a preliminary term sheet with certain banks and financial institutions to provide for a syndicated term loan facility for approximately Rs 67.5 billion and intends to seek additional financing through export credit agencies for approximately Rs 45 billion to Rs 67.5 billion.

The company also hopes to raise further debt financing of approximately Rs 22.5 billion to Rs 33.75 billion in accordance with funding requirements for the project.

Sources said with the new plant, the capacity of RIL-RPL plant in Jamnagar will become 1.2 million barrels per day making it the single largest refinery in the world. The new plant will make Jamnagar the refinery hub of the world.

The current global demand is 81.8 million barrels per day and it is expected to rise to 105 million barrels per day by 2020. However, there is shortage of refinery capacity since no new refinery capacity has been added in US and Europe in the last few years, making it an opportunity for RPL to cash in.

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