The Hindu Business Line : Reliance Petro raises $1.5 b loan for Jamnagar refinery project

The loan facility will be used to finance the setting up of a new refinery having an installed capacity of approximately 27 million tonnes and a 0.9-mt polypropylene complex.
The total cost of the project is expected to be $6 billion, making it by far the single largest single petrochemical/refinery project investment ever in Asia.

Mumbai , Feb. 15

RELIANCE Petroleum Ltd, a wholly owned subsidiary of Reliance Industries Ltd, has concluded a $1.5-billion borrowing deal to part-finance its $6-billion export-oriented refinery project at Jamnagar.

The $1.5-billion syndicated loan facility is the single largest limited recourse financing mandated in the Asian markets in recent years, excluding China and the fourth largest single mandate in Asia in the last five years, said a company release here on Wednesday.

RPL had recently mandated 14 leading international and domestic banks — ABN Amro Bank N.V, Bank of America N.A., Bank of Tokyo - Mitsubishi UFJ, BNP Paribas, Calyon, Citigroup Global Markets Singapore Pte Ltd, DBS Bank Ltd, DZ BANK, ICICI Bank, Mizuho Corporate Bank Ltd, Standard Chartered Bank, State Bank of India, Sumitomo Mitsui Banking Corporation and The Hong Kong and Shanghai Banking Corporation Ltd — to arrange this $1.5-billion syndicated loan.

The facility will be used to finance the setting up of a new refinery having an installed capacity of approximately 27 million tonnes (5,80,000 bpd) and a 0.9-mt polypropylene complex. Sixth largest: On a standalone basis, the new refinery is expected to be the sixth largest at any single location in the world and together with RIL's existing 33 mt per annum refinery at Jamnagar, this will be the largest concentration of refinery assets at a single location globally.

The new refinery, with a Nelson Complexity Index of 14.5, is one of the most complex refineries globally. High complexity enables the refinery to process a wide variety of crude with a flexible output. The total cost of the project is expected to be $6 billion, making it by far the single largest single petrochemical/refinery project investment ever in Asia.

IPO: RPL has already announced its decision to go ahead with a domestic initial public offering of approximately $1.1-1.3 billion as part of financing the project.

The transaction signals the reopening of the project finance market in India with its hybrid project finance/corporate loan structure, which, in the last decade, has not witnessed a significant risk participation by the foreign banks on a non/limited recourse basis.

This landmark fundraising by RPL will be India's largest ever offshore syndicated loan financing and the final maturity of 10 years represents the longest maturity for any corporate term debt issuance out of India. The facility's door-to-door tenor of 10 years will open a new window for Indian corporates, since the maturity profile for the offshore syndicated loans has been largely restricted to 5-7 years as of date.

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