IOC’s $500m loan to partly fund Orissa plant
New Delhi   26-Jan-2011

Country’s largest oil marketing company IndianOil (IOC) has sourced $500 million bullet loan to partly fund its upcoming refinery in Orissa. “This is a bullet-term loan for five years. IOC has received funds in last week of December,” said an official privy to the development.

Five different banks from India, Japan and France have arranged the loan. They are State Bank of India, Japan’s The Bank of Tokyo-Mitsubishi UFJ, Paris-based BNP Paribas, Tokyo’s Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation.

Major chunk of the fund will be utilised for upcoming refinery complex in Paradip, said a senior IOC official. Rest will go towards general projects as capital expenditure of the company, he added.

IOC is setting up a 15 million tonne per annum (mtpa) greenfield refinery and petrochemical complex at Paradip in Orissa. The phase one production from the refinery is expected to commence in March next year. The refinery operations are expected to stabilise by 2012-end.

The project is estimated to cost around Rs 29,777 crore. The government-run company has already spent Rs 4,500 crore till November last year for the project. Till now, IOC has secured a term loan of Rs 14,900 crore to set up the new refinery unit. This loan has been arranged with a consortium of 21 banks and other financial institutions. SBI is lead arranger of the loan.

The $500 million loan is in addition to already secured funds of the company. In a bullet term-loan, the borrower is expected to repay the entire principal amount and sometimes even the interest in one go at the end of loan period. The payment made at the end of expiry of loan tenure is known as balloon payment.