IOC’s 15 MMTPA Paradip Refinery Project Achieves Financial Closure

A Consortium of 21 Lenders led by the State Bank of India committed a Rupee Term Loan of Rs 14900 crores on 14th May 2009 to Indian Oil Corporation Ltd (IOC) for its 15 MMTPA Grassroots Refinery Project being implemented at Paradip, Orissa. The execution of loan agreements was concluded on 14th May, 2009 at a glittering ceremony in New Delhi.

SBI Capital Markets Ltd (SBICAPS), which is ranked as No. 1 Mandated Lead Arranger in the Asia Pacific region and No. 2 in Global rankings, acted as sole advisor and arranger for this deal. The term loan facility having a door-to-door tenor of 14 years has been tied up through a consortium of 19 Public Sector Banks and 2 Financial Institutions viz. LIC & HUDCO.

This transaction, which is the largest syndicated rupee term loans arranged in Indian Debt markets for a single project, comes at a time when both global & domestic economies have started witnessing signs of revival.

The project envisages a total outlay of Rs 33504 crores, which is proposed to be funded by a combination of Debt (Rupee & Foreign Currency Loans) and Equity (internal accruals). The present financing pertains to the domestic component of the capital expenditure.

SBI Capital Markets Ltd. (SBICAP) has structured the facility to pass on the benefits of declining interest rate to the Borrower during its entire tenor of 14 years. The other key features of the transaction include a “Ring Fenced” Project Finance deal which ensures that the other borrowing programmes of IOC are least affected and at the same time the Lenders derive comfort from IOC Balance Sheet. The project is likely to be commissioned by early 2012 and implementation of the project is already in full swing.