HPCL Refinances ₹51,970 Crore Rajasthan Refinery Debt, Targets ₹1,000 Crore Annual Savings – Indian PSU

Hindustan Petroleum Corporation Limited (HPCL) has refinanced and repriced debt worth ₹51,970 crore for its Rajasthan refinery project at a lower cost, in a move aimed at reducing the interest burden and strengthening the project’s financial position.

HPCL Rajasthan Refinery Limited (HRRL), a joint venture between HPCL and the Government of Rajasthan, has secured lower borrowing costs through a revised financing arrangement with a consortium of lenders. The refinancing is expected to generate substantial annual interest savings as the refinery advances its operations.

Major lenders participate in refinancing

The financing consortium includes the National Bank for Financing Infrastructure and Development (NaBFID), India Infrastructure Finance Company Limited (IIFCL), ICICI Bank, UCO Bank and Punjab & Sind Bank.

The revised arrangements are intended to optimise HRRL’s financing structure and lower its interest expenses. The transaction also reflects the role of infrastructure-focused lenders and commercial banks in financing large-scale energy projects.

Rajasthan refinery project cost rises to ₹79,459 crore

The refinancing comes against the backdrop of a substantial increase in the estimated cost of the Rajasthan refinery project.

In April 2026, the Cabinet Committee on Economic Affairs approved an increase in the project’s cost from ₹43,129 crore to ₹79,459 crore. It also cleared an additional equity investment of ₹8,962 crore by HPCL, taking the corporation’s total equity investment in HRRL to ₹19,600 crore.

Located at Pachpadra in Rajasthan’s Balotra district, the refinery-cum-petrochemical complex has a designed refining capacity of 9 million tonnes per annum (MMTPA) and petrochemical capacity of 2.4 MMTPA. HPCL holds a 74% stake in HRRL, while the Rajasthan government owns the remaining 26%.

The refinery was dedicated to the nation by Prime Minister Narendra Modi on July 4, 2026.

Rajasthan government support strengthens financial position

The project’s financing plan also includes support from the Rajasthan government through interest-free loans of ₹1,100 crore annually, according to the reported financing details.

HPCL has also converted ₹4,300 crore of subordinated loans into equity, strengthening HRRL’s capital structure.

The combination of lower borrowing costs, equity support and state government assistance is expected to help the refinery manage its financial obligations during its operational ramp-up.

Profitability remains the key test

The refinancing is a significant step in managing the financial burden of one of India’s major refinery-cum-petrochemical investments. However, the long-term financial performance of HRRL will depend on its ability to ramp up production, achieve operational efficiencies and generate adequate cash flows.

The expected interest savings could improve the project’s financial performance, but sustainable profitability will ultimately depend on refining margins, petrochemical demand, capacity utilisation and the management of operating costs.

For HPCL, the Rajasthan refinery represents a major expansion of its refining and petrochemical footprint. Lower financing costs will provide some relief as the company works to translate the project’s large capital investment into sustained returns.