Chennai Petroleum Corporation Limited (CPCL) has formed a joint venture (JV) with its parent company Indian Oil Corporation (IOCL) and other seed equity investors to build a refinery, with an investment of Rs315.80bn ($3.95bn), in the southern Indian state of Tamil Nadu.

The other seed equity investors include Axis Bank, ICICI Bank, HDFC Life Insurance Company, ICICI Prudential Life Insurance Company, and SBI Life Insurance Company.

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The nine million tonnes per annum (Mmtpa) refinery is planned to be built at the Cauvery Basin Refinery of the Nagapattinam District.

National Iranian Oil Company, which owns an approximately 15% stake in CPCL, was operating a small refinery in the Cauvery basin at Nagapattinam.

The JV plans to build the new refinery upon dismantling the existing 1Mmtpa refinery. The new refinery will be equipped to produce liquefied petroleum gas, BS VI quality gasoline, diesel, and aviation turbine fuel.

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CPCL will own a 25% interest in the new refinery while IOC and other seed equity investors will own the remaining stakes.

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The CPCL board also approved an equity investment of up to Rs25.7bn ($321.72m) for its 25% contribution to the joint venture.

As of 30 June 2022, IOCL owed a 51.89% stake in CPCL.

Last year, the Press Trust Of India (PTI) reported that IOC plans to invest nearly $13.5bn in the next four to five years to boost its refining capacity by more than 25 million metric tonnes per annum, to 106.7 million tonnes.

The investment is a part of the firm’s plan to meet the anticipated fuel demand growth in the near future.