ONGC to lend Rs 5,000 cr to MRPL for expansion

State-run Oil and Natural Gas Corporation (ONGC) will lend Rs 5,000 crore to its subsidiary Mangalore Refinery and Petrochemicals (MRPL) for expansion projects.

MRPL is expanding its refining capacity to 15 million tonnes a year from present 9.68 million tonnes per annum at a cost of Rs 12,160 crore. Besides, it is setting up a 450,000 tonnes a year propylene unit at an investment of Rs 1,804 crore. Both the projects are scheduled for commissioning by March 2012.

"We will lend Rs 5,000 crore to MRPL at 3.85 percentage points lower than State Bank of India's prime lending rate, which presently works out to 7.9 per cent," ONGC Chairman and Managing Director R S Sharma said.

Propylene can be converted into polypropylene, which is used in a wide range of industries.

While MRPL will spend another Rs 5,000 crore from internal accruals, it would raise the balance Rs 4,000 crore in overseas debt by March 2012, MRPL Director (Finance) L K Gupta said.

MRPL Managing Director U K Bose said MRPL was ready to produce Euro-IV grade petrol and would begin production of same grade diesel from April.

The company may import 12.1 million tonnes of crude oil in 2010-11 fiscal, he said.