SBI to raise Rs 4,000 cr for BPCL's petrochemical plan

State-run Bharat Petroleum Corporation Ltd (BPCL) is planning to raise Rs 4,000 crore for the expansion of its Kochi refinery and to fund its petrochemicals venture, said three banking sources aware of the development. State Bank of India (SBI) has received the mandate to raise funds.

BPCL is planning to diversify into downstream petrochemicals with an investment of Rs 4,588 crore by using propylene. The public sector refiner is planning to produce niche petrochemicals such as acrylic acid, acrylates and oxo alcohols, which are predominantly being imported into the country, at its Kochi refinery facility, using the polymer grade propylene that will be available after the ongoing integrated refinery expansion project (IREP) is completed.

“The board of directors of BPCL has given their approval for diversification into petrochemicals at an estimated capital cost of Rs 4,588 crore,” BPCL had said this month.

"We will be financing the project through both internal accruals and external financing," said a senior BPCL official.

The company will invest around Rs 14,225 crore in its expansion at the Kochi refinery and Rs 5,000 crore for setting up a petrochemical joint venture.

The total investment in both the projects is about Rs 20,000 crore. BPCL is in the process of increasing the refining capacity of Kochi refinery from 9.5 million tonne per annum (mtpa) to 15.5 mtpa under IREP project and improve the auto-fuel quality to Euro-IV/V levels to meet the growing demand of petroleum products in Indian market.This would also upgrade the refinery residue stream to value added distillates, which BPCLis planning to use for diversification into value-added petrochemical products.

BPCL’s planned petrochemical products will have major applications in industries such as paints and coatings, adhesives, plasticisers, solvents, water treatment, etc. The petrochemical unit is expected to come on stream during the financial year 2018-19. The project proposal will now be submitted for obtaining environmental clearance, said BPCL.

The Kochi refinery is presently producing petrochemical feed stocks such as benzene, toluene and propylene in addition to the various petroleum products and specialty products. Increased quantities of naphtha will be produced in the refinery after the proposed capacity expansion.

BPCL will integrate the refinery with a petrochemicals complex to utilise naphtha and other feedstocks from the refinery.