Lakshmi N Mittal and his partner Hindustan Petroleum Corporation [Get Quote] Limited will arrange finances for the Rs 18,919 crore (Rs 189.19 billion) Bhatinda refinery project this month and are aiming to complete the project by 2010-11.

Mittal Energy Investments Pte Ltd, a subsidiary of Mittal Investments, has parked $110 million in an escrow account as guarantee for its 49 per cent stake in the 9 million tons refinery project.

"The project is being financed in 1.5:1 debt-equity ratio... while equity is not a problem, for the Rs 10,733 crore (Rs 107.33 billion) debt we are in discussion with State Bank of [Get Quote] India-led consortium," HPCL Chairman and Managing Director Arun Balakrishnan said.

HPCL will also hold 49 per cent stake in the project while Indian financial institutions would hold two per cent. Balakrishnan said Guru Gobind Singh Refinery Ltd may also resort to external commercial borrowing to meet the debt requirement as the difference between overseas and domestic borrowings was 3.5-4 per cent interest rate.

"As Mittal Energy is issued shares of GGSRL, money from the escrow account will flow into the company. The escrow money is equivalent to Rs 450 crore, which we have also committed as initial equity in the project," he said.

Total equity investment by the two firms would be Rs 3,577.50 crore (Rs 35.77 billion) each. The two partners would appoint three members each on GGSRL board and rotate the chairman's job every two years.

Petroleum Minister Murli Deora said the project would be completed by 2010-11.