Numaligarh Refinery Limited (NRL) will borrow money from the market through an initial public offering (IPO) to fund its new expansion project that is slated for commissioning by 2017.

A senior NRL official said the total cost of the refinery expansion would be around Rs 16,000 crore of which Rs 12,000 crore would be spent on the refinery and the rest on the pipeline. “The IPO would hit the market around 2016,” the official added.

If this happens, the refinery would be issuing an IPO for the first time.

He said the company had no debt as of now and there should not be any problem in arranging for funds. “Our shareholders are with us and we will get support from them,” he said.

The refinery is a subsidiary of Bharat Petroleum Corporation Ltd, which owns a 61.65 per cent stake.

During 2010-11, NRL achieved a record sales turnover of Rs 8,972 crore, registering a growth of 13.9 per cent over the previous year’s turnover of Rs 7,874 crore. The company’s profit before tax was recorded at Rs 415 crore, a 14.6 per cent increase over the 2009-10 figure of Rs 362 crore. The net profit at Rs 279 crore rose by 20.3 per cent over last year’s corresponding figure of Rs 232 crore.

NRL is currently operating a 3MMTPA refinery in central Assam and is planning to expand its capacity to 8MMTPA to make operations viable.

He said the Planning Commission had already approved the expansion project in the Twelfth Plan period.

The refinery will now carry out a detailed route survey for its pipeline, which is proposed to be laid for transportation of crude oil from Dhamra port in Odisha to Numaligarh in central Assam.

The route, however, may be changed depending on the feasibility. Offers have been sought from competent agencies having done similar jobs involving petroleum pipelines of minimum 200km length in a single contract during the last five years.

The detailed route survey would entail reconnaissance survey, corrosion survey, soil stratification survey, geotech investigation, cadastral survey and obtaining approvals for pipeline crossings from various authorities.

Sources said it would have to be ascertained whether the pipeline would be passing through any forest areas for which clearances would have to be taken from the ministry of environment and forests. Obtaining a forest clearance is a time-consuming process.