BPCL signs ₹31,802-crore loan deal with SBI-led consortium for petrochem, refinery projects

Bharat Petroleum Corporation Ltd (BPCL) announced on Thursday, January 16, 2025, that it has signed a ₹31,802 crore loan agreement with an SBI-led consortium. According to a regulatory filing to the stock exchanges, the financing will support the development of a petrochemical complex and the brownfield expansion of BPCL's refinery capacity at Bina, Madhya Pradesh.

The consortium, led by the State Bank of India (SBI), includes Punjab National Bank, Union Bank of India, Canara Bank, Bank of India, and Export-Import Bank of India. The oil marketing company (OMC)'s capacity at Bina will be expanded from 7.8 million tonnes per annum (MMTPA) to 11 MMTPA, catering primarily to the feedstock needs of the petrochemical plants. 

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BPCL inks ₹31,802-crore loan deal: How will it benefit the OMC?

BPCL said the funds will be used to construct a petrochemical complex that produces downstream polymers and chemicals such as linear low-density polyethene (LLDPE), high-density polyethene (HDPE), polypropylene (PP), benzene, toluene, and mixed xylene.

The loan agreement was finalised today with a project finance term loan structure. Security for the loan includes a first-ranking pari passu charge on the project land, tangible fixed assets, and designated accounts like the debt service reserve account. Shares of BPCL settled 0.04 per cent lower at ₹267.05 apiece on the BSE.

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Earlier this month, news agency PTI reported that the government is likely to provide a subsidy of ₹35,000 crore to Indian Oil Corporation Ltd (IOC), BPCL, and Hindustan Petroleum Corporation Ltd (HPCL) to make up for losses they incurred on selling the fuel this fiscal.

The three fuel retailers have kept the price of domestic LPG unchanged at ₹803 per 14.2-kg cylinder since March 2024, despite a rise in input raw material costs. This led to under-recoveries in LPG sales and a drastic fall in their earnings from April to September (the first half of the current 2024-25 fiscal year).

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IOC, BPCL and HPCL are likely to get ₹10,000 crore during the current 2024-25 fiscal and the remaining ₹25,000 crore in the next, they said, adding that provision of the subsidy is likely to be made in the Union Budget for 2025-26 that Finance Minister Nirmala Sitharaman will present on February 1.