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Chennai Petroleum Corporation Limited (CPCL) has received its board of directors’ approval for forming a joint venture with Indian Oil Corporation and other seed equity investors. The JV will implement a 9 MMTPA refinery project at Cauvery Basin Refinery, Nagapattinam District, Tamil Nadu. On Tuesday, CPCL shares skyrocketed by nearly 10% on Dalal Street in a single day.
The 9 MMTPA refinery project’s cost is estimated at a whopping ₹31,580 crore.
As per the filing, other seed equity investors in the JV are Axis Bank, HDFC Bank, LIC, ICICI Bank, ICICI Prudential Life Insurance, and SBI Life Insurance.
Further, CPCL stated that the board also approved equity investment up to ₹2,570 crore in the joint venture – towards the company’s contribution of 25%.
Under the JV, both Indian Oil and CPCL will hold a 25% stake each, together they will hold a stake of 50%. While remaining 50% stake in the JV will be held by other seed investors.
CPCL’s main products are LPG, Motor Spirit, Superior Kerosene, Aviation Turbine Fuel, High-Speed Diesel, Naphtha, Bitumen, Lube Base Stocks, Paraffin Wax, Fuel Oil, Hexane, and Petroleum Coke.
On BSE, CPCL shares closed at ₹305.95 apiece up by ₹22.75 or 8.03%. The shares touched the day’s high of ₹311.25 apiece – resulting in a rise of 9.9% in one day. The company’s market cap is around ₹4,555.94 crore.
Last month, in its annual report for FY22, CPCL highlighted that the 9 MMTPA refinery “will be set up in an area of about 1,300 acres. This new refinery will produce Petrol and Diesel of Bharat Stage-VI specifications and Polypropylene as a value-added product, at a Project cost of ₹31,580 crore. Further investment of about ₹4,000 crore will flow into the project from other stakeholders on ‘Build Own and Operate’ (BOO) basis.”
Through the 9 MMTPA refinery project, CPCL expects to set up downstream industries, similar to the Manali area. Also, create another major port at Nagapattinam and contribution to State Exchequer. Further, the company expects potential for downstream petrochemical industries, based on feedstocks from the refinery. Additionally, it expects product evacuation by Cross country pipelines & by Ships for meeting demands in Tamil Nadu & Neighbouring states. These are some of the benefits.
The project is expected to be completed by June 2025.
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