Hindustan Petroleum Corp. (HPCL) has successfully refinanced approximately ₹50,000 crore of debt at its Rajasthan refinery, securing a reduction of around 105 basis points in borrowing costs. According to reports from Business Standard, the refinancing, effective October 3, is expected to save the company about ₹470-500 crore annually. The refinancing was executed through HPCL Rajasthan Refinery Limited (HRRL), the joint venture company, with the facility currently operating at about 60% utilisation. As per Business Standard, the term loan proceeds will be utilised for the part refinancing of existing project loans, while working capital facilities will support HRRL's working capital requirements and help address cash flow mismatches associated with the project.
The company has implemented comprehensive financial restructuring measures beyond the debt refinancing. As reported by Business Standard, the Rajasthan government infused ₹1,500 crore of equity into the refinery during the September quarter, while HPCL converted ₹4,300 crore of subordinated loans into equity. The conversion is expected to lower interest costs by about ₹350 crore. According to Business Standard, further equity calls are planned over the next one or two quarters. Additionally, the state has committed to providing about ₹1,100 crore annually in interest-free loans, with the first instalment already received. As per Business Standard, HPCL CEO Kaushal stated that the financial restructuring is aimed at improving the economics of the Rajasthan refinery and could reduce annual interest costs by about ₹1,000 crore compared with the previous year.
HPCL is facing significant financial pressure from rising LPG under-recovery, with the company reporting ₹327 per 14.2 kg domestic cylinder in November 2026, representing a 34% monthly increase from ₹245 per cylinder in October. According to The Hindu BusinessLine, the company's total under-recovery in Q2 FY27 reached approximately ₹18,049 crore, compared to ₹12,798.67 crore in March 2026 and ₹14,240.64 crore in September 2025. The industry-wide under-recovery has also increased substantially, with PSU OMCs cumulative under-recovery rising from ₹51,000 crore in June to over ₹62,000 crore in August 2026. Freight costs have also escalated significantly, with HPCL management noting that freight rates almost doubled between Q1 FY27 and Q2 FY27, with Houston-Asia VLGC freight rates exceeding $200 per tonne in mid-April 2026 and continuing to rise above $300 in August.
The facility's commercial operation date was declared on June 22, and HPCL expects throughput to reach a run rate of 8-9 million tonnes per annum around December, give or take a week or two. According to Business Standard, the refinery recorded a gross refining margin of about USD 12 per barrel in the September quarter, with margins expected to rise above USD 20 per barrel in the fourth quarter as it transitions to processing higher-sulphur crude. Product shipments have already increased significantly, with the refinery shipping about 15,000 tonnes of products on the day before the call, compared with no shipments three months earlier. As per Business Standard, October shipments are expected to exceed 400,000 tonnes, generating revenue of more than ₹4,000 crore for the month. HPCL CEO Kaushal indicated that the refinery could post a positive monthly profit before tax in October, though he stressed this was an expression of management's optimism rather than formal guidance.
