Kharafi group to invest $150m in Indian refinery
New Delhi, November 26, 2010
Kharafi Group will invest $150 million in a 100,000 barrels per day (bpd) coastal refinery being built by Cals Refineries, the Indian company said on Friday, the first such investment by a Kuwaiti firm.
The financing could finally allow Cals Refineries to push ahead with long-delayed plans to build the plant. Shares in the company were up over 7 percent on the Bombay stock exchange.
Kuwaiti family conglomerate Kharafi Group is likely to get an equity stake with investment, a source with direct knowledge of the company's operations told Reuters.
The refinery could cost as much as 50 billion rupees ($1.10 billion) and the company is looking at raising further funds, the source said.
Cals Refineries, which has a market value of about $100 million, said in a stock exchange filing the deal with Al Qebla Al Watya, the investment arm of Kharfi, was signed on Thursday and is subject to statutory government and regulatory approvals.
Cals Refineries bought an existing refinery from German firm Bayernoil and planned to reconstruct it on the coast at Haldia in India's West Bengal state. It has repeatedly delayed the start up of the plant due to financial constraints.
The latest timeframe for the plant's start-up was given in September by the company, when it told the stock market it expected commissioning in the Jan-March 2012 quarter, a delay of about 2 years from the initial estimates.
In 2008, Ravi Chilukuri, who heads Spice Energy which owns Cals Refineries, said oil major BP had agreed to supply full fuel requirements of the plant for about 10 years and agreed to buy 65 per cent of throughput at market prices.
Cals Refineries also has a product supply agreement with Indian state-refiner Bharat Petroleum Corp-Reuters