Indian Oil said to mull investing $3.5 billion to expand, upgrade refineries

Mumbai: India’s biggest oil refiner Indian Oil Corp. is planning to invest as much as $3.5 billion in the year beginning 1 April, or about a fifth more than the previous year, to expand and upgrade its refineries and boost its marketing network, according to people with knowledge of the matter.

The company plans to use internal resources for the capital expenditure and has no plans to raise loans or issue bonds, the people said, asking not to be identified as they aren’t authorized to speak to the media. Cash generation at all its refineries has improved and even the newest at Paradip in eastern India is likely to report a profit for the first time this year, they said.

A New Delhi-based spokesman for Indian Oil couldn’t immediately comment on the investment and financial plans.

Expansion of refining and marketing capacities is crucial for the refiner to maintain its leading position in the world’s fastest-growing oil consumer. It controlled about 35% of the nation’s oil refining capacity and 45% of the domestic petroleum-products market in the year ended 31 March 2017. The company is facing competition from private refiners, which more than doubled their fuel retail market share in three years.

Indian Oil is likely to invest about Rs19,000 crore ($2.9 billion) rupees on expansion of its refining and petrochemicals capacities, pipeline network and marketing infrastructure in the year ending 31 March. The refiner had earlier said it will invest Rs1.8 trillion over 5-7 years to expand capacity and set up new plants.

Indian Oil Corporation