India’s Numaligarh Refinery eyes IPO, debt to fund expansion

22 August 2012 09:36  [Source: ICIS news]

KOLKATA (ICIS)--India’s Numaligarh Refinery Limited (NRL) is looking at raising part of the $3.6bn (€2.9bn) required for its expansion project via an initial public offering (IPO) of new shares, a company official said on Wednesday.

The company is also considering floating bonds overseas to fund the project, in which NRL intends to triple its refining capacity in India’s northeastern province of Assam to 9m tonnes/year by 2017, the official said.

The project also includes construction of a 150km pipeline to transport high-speed diesel (HSD) to Bangladesh, the official said.

“NRL is a debt-free company and raising funds through a mix of debt and equity should be no problem. The company would shortly be appointing a merchant banker to advise on [the] debt-equity ratio and the number of shares to be offered to public within limits of equity holding dilution of existing shareholders of NRL,” the company official said.

NRL is 61.65%-owned by Bharat Petroleum Corp Ltd (BPCL), with Oil India Ltd (OIL) holding a 26% stake, while the remaining 12.35% is held by the provincial government of Assam.

“The timing of equity offer and debt raising exercise will depend on market conditions and closer to date of completion of the expansion project and subject to advise of merchant bankers,” he added.

The grassroot refiner was also exploring the option of roping in an investor for its crude and petroleum transportation project, including hiving it off into a separate entity subject to feasibility studies and marketing options, the official said.

Under the expansion project, NRL further plans to build a pipeline that will link its refinery in Numaligarh to Dhamra Port in the eastern Indian coastal province of Orissa. The port is operated by a joint venture of the Tata Group and Larsen & Toubro, an engineering construction company.

According to initial project report, the pipeline from Dhamra Port would connect to a point in Siliguri in North Bengal from where spare capacity of existing pipeline of Oil India Limited (OIL) would be utilized for subsequent transportation of crude to Numaligarh.

An option of seeking collaboration with OIL, an existing shareholder in NRL, for the pipeline project is also being considered and preliminary discussions have also been held between the two companies, the official said.

($1 = €0.80)

By: Ajoy K Das
+65 6780 4359

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