The Cabinet today approved setting up of a refinery in Barmer, Rajasthan. It will be have 9 milion tonnes annual capacity.

HPCL will have 74 per cent equity and remaining 26 per cent will be with the Rajasthan Government. Total cost will be Rs 37,230 crore and it will be completed in four years after getting all the approvals.

Sonia Gandhi is scheduled to lay foundation stone for the refinery at Pachpadra in Barmer district of Rajasthan on Sunday.

Sources said the function at Pachpadra will also be attended by Rajasthan Chief Minister, Ashok Gehlot, and Oil Minister, M. Veerappa Moily.

The 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 instalments 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.

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