State-owned Hindustan Petroleum Corporation Ltd (HPCL) will set up the greenfield project at Barmer district of Rajasthan in joint venture with the state government, Information and Broadcasting Minister Manish Tiwari told reporters here after the Cabinet meeting.
"The project cost is proposed to be sourced with a debt-equity ratio of 1.5:1. Total equity component is Rs 14,892 crore and debt is Rs 22,338 crore," he said.
Gandhi is scheduled to lay foundation stone of the 9 million tonnes (MT) refinery at Pachpadra on Sunday.
HPCL is to hold up to 74 per cent stake in the project, while the balance 26 per cent will be with Rajasthan government.
HPCL's equity contribution is Rs 11,020 crore at 74 per cent equity and Government of Rajasthan's equity contribution is Rs 3,872 crore at 26 per cent, he said.
Rajasthan government has also agreed to provide interest free loan of Rs 3,736 crore every year for 15 years from the date of commencement of production.
The same is to be repaid by the joint venture in equal annual installments from 16th year, after commercial production commences for the next 15 years.
Sources said HPCL will have the marketing rights, including first right of refusal in respect of uplifting and purchase of all products (including petrochemials), which would be produced by the refinery.
The refinery, which is planned to go on stream in four years, will source half its crude oil from Cairn's Barmer oilfields, while the remainder will be imported.
Besides petrol, diesel and LPG, the project will also produce 2.3 MT of petrochemical products such as polypropylene, polyethylene and aromatics which are used for making plastic.