Barmer Oil Refinery To Get Rs 4,785 Crore Loan From REC, Long-Delayed Project To Be Commissioned By 2024

REC Limited, a Maharatna Central Public Sector Enterprise under the Union Ministry of Power, will provide a loan amounting to Rs 4,785 crore to HPCL Rajasthan Refinery Limited (HRRL) in Barmer district, Rajasthan.

HRRL is a Joint Venture company of Hindustan Petroleum Corporation Limited (HPCL) and the Government of Rajasthan with a respective equity stake of 74 per cent and 26 per cent.

The project includes setting up of an energy efficient and environment friendly refinery cum petrochemical complex with a capacity of 9 Million Metric Tonnes per Annum (MMTA) which includes 2.4 MMTA of Petrochemical products.

Additionally it also includes crude and product storage facilities, a captive Power Plant for meeting refinery's power and steam requirement and township and allied facilities and utilities.

The biggest project being undertaken in the oil sector in India, the Barmer Refinery will produce clean fuels such as BS-VI grade Motor Sprit (MS or Petrol) & BS-VI grade High-Speed Diesel (HSD or Diesel).

Further, the refinery will produce about 26 per cent of petrochemical products from the very beginning. It will have worlds’ largest Polypropylene Unit & Polyethylene swing unit to make more than 30 different polymer grades.

The Project will help serve the increased demand of petroleum and petrochemical products in the country and the Western, Northern and Central parts of India in particular.

Long Delay

The greenfield project in Barmer officially got off the ground on 18 September 2013, when the joint venture was incorporated. There are a total of 13 units in the oil refinery spread across 900 acres of land.

The project received government's approval on 09 October 2017. The work commencement ceremony was carried out by Prime Minister Narendra Modi on 16 January 2018.

Union Petroleum Minister Hardeep Puri during a visit to the site in Feb 2023 said that the project will be ready by January 2024 and will be fully functional by 2024.

Cost escalation

The estimated project cost had gone up from Rs 43,000 crore in 2018 to Rs 72,937 crore.

Subsequently, in February this year, the Centre asked the Rajasthan government to bear the extra cost, which it did not seem to be “ready” to do so.

Consequently, the Union government has expressed its willingness to take on the additional cost, which would reduce the state government’s equity by 10 per cent — from 26 per cent to 16 per cent.

The latest assistance to the HRRL is part of the loan agreement under consortium arrangement for Rs 48,625 crore wherein the share of state-run REC Ltd is Rs 4,785 crore.