Oil refining and marketing firm Hindustan Petroleum Corp (HPCL) plans to borrow up to $150 million, likely through a syndicated five-year Japanese yen loan, to fund its long term capital expenditure.“After considering our internal accruals/sales of oil bonds we now require long term borrowings of Rs 850 crore urgently. Out of this, it is proposed to borrow a sum of Rs 450-675 crore ($100 million with a greenshoe option of $50 million) from external commercial borrowing,” says an HPCL document.The oil marketing company plans to spend Rs 23,000 crore between 2007 and 2012 with a focus on refinery, exploration and natural gas distribution. Of this, Rs 9,000 crore would go into doubling the capacity of its Visakhapatnam refinery to 300,000 barrels per day with a petrochemicals complex there for an equal sum.Another Rs 3,000 crore would be invested in domestic and overseas exploration while Rs 700 crore has been earmarked for expanding into gas distribution and marketing infrastructure.HPCL said that its large capex requirement could not be met through domestic loans alone. Moreover, it contends, the interest cost for ECB would be lower by about Rs 10 crore during the loan tenure compared to domestic borrowings.The state-run undertaking has appointed DEPFA Investment Bank and HDFC Bank as their quote was very competitive compared to recent ECB borrowings. Roadshows would be held at Singapore, Taipei and London for the loan syndication, it said.
