| HPCL LNG Limited | ||||||
| 'Crisil AA+ / Stable / Crisil A1+ ' assigned to Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has assigned its ‘Crisil AA+/Stable/Crisil A1+’ ratings to the bank facilities of HPCL LNG Limited (HPLNG).
The rating derives comfort from the company’s strategic importance to the parent, Hindustan Petroleum Corporation Ltd (HPCL, rated 'Crisil AAA/Stable/Crisil A1+'). The parent holds 100% stake in HPLNG and will continue to provide operational, managerial and financial support to HPLNG. The company remains critical to HPCL, as it helps the latter address the gap in the gas value chain and acts as a key infrastructure link enabling HPCL to secure, process, and utilise LNG efficiently across its operations. The ratings also factor in successful commissioning of the terminal and near completion of ancillary facilities.
HPLNG operates a 5 MMTPA LNG regasification terminal at Chhara, Gujarat. The terminal, which commenced operations in February 2025, operates on a pure tolling model, providing regasification services to customers, primarily HPCL. The project cost (with the cost overrun) is around Rs 4,744 crore, and is funded via 70% debt and the rest via equity.
The business risk profile of HPLNG is supported by the growing demand for liquefied natural gas (LNG) in India, with city gas distribution (CGD) emerging as a key growth driver for natural gas consumption over the long term. Completion of construction of the terminal and the pipelines, and near completion of the breakwater have also been factored into the ratings. The terminal's strategic location on the west coast facilitates access to LNG and its transportation to refineries. The ratings also consider the captive usage of the terminal's offtake by HPCL for its refineries and subsidiaries, which ensures steady demand.
Crisil Ratings has taken note of the current disruptions faced in gas supply due to the ongoing geopolitical conflict. The terminal is currently non-operational as HPCL is not able to procure LNG from its sources in the Middle East. However, it is actively looking to source gas from alternate geographies, which should help utilisation levels improve gradually. Crisil Ratings will continue to monitor developments relating to geopolitical risks in West Asia and their potential impact on LNG availability and terminal utilisation.
The financial risk profile factors in outstanding debt of around Rs 3,022 crore, along with preference shares worth nearly Rs 292 crore issued to HPCL as on December 31, 2025. Principal repayment will commence from fiscal 2028. Meanwhile, as operations are currently disrupted due to the war, interest obligations are being serviced by HPCL. Crisil Ratings derives comfort from the strong financial profile of the parent and the demonstrated liquidity support available to HPLNG. |
Analytical Approach Crisil Ratings has applied its parent notch-up framework to factor in the extent of support received from HPCL, and has considered the standalone business and financial risk profile of HPLNG for its analysis. The preference shares issued to HPCL (worth Rs 291.66 crore) have been considered as 100% debt. |
Key Rating Drivers - Strengths Strong support from the parent, HPCL: HPLNG helps HPCL address the gap in the gas value chain and acts as a key infrastructure link that enables the latter to secure, process, and utilise LNG efficiently across its operations. Both the entities have a strong strategic link, with regassified LNG being utilised across segments such as refineries, CGD, petrochemicals, and joint ventures.
Association with HPCL provides HPLNG flexibility to raise capital at competitive rates. Apart from the budgeted investment of Rs 1,460 crore for the project, HPCL has also subscribed to preference shares issued by the company (worth nearly Rs 292 crore). Moreover, as HPLNG’s operations are currently disrupted due to the war, HPCL is fulfilling its interest obligations. The parent has also provided a promoter support agreement for HPLNG’s borrowing programme.
Favourable location and competitive pricing: HPLNG terminal at Chhara on the west coast provides a strategic advantage, given the region’s established ecosystem for LNG imports and proximity to key consumption centres such as refineries. This enables efficient receipt and onward transportation of gas, thereby enhancing operational flexibility. Additionally, HPLNG is able to offer competitive regasification tariffs in line with industry peers, which further strengthens its market position. |
Key Rating Drivers - Weaknesses Exposure to terminal stabilisation and capacity ramp-up risk: As the terminal is at an early stage of operation, utilisation rates are relatively lower. The company is likely to focus on stabilising its operations and gradually onboarding customers. So far, capacity of only 1 million metric tonne per annum (mmtpa) has been secured with HPCL. While the parent is likely to consume majority of the terminal's capacity in the medium term, the pace of this offtake and ability to secure contracts with other customers for the remaining capacity will be closely watched.
Competition from other LNG terminals: The terminal faces stiff competition from established terminals such as Dahej (Petronet LNG Limited, rated 'Crisil AAA/Stable'), which operates at a consistently high utilisation level, alongside players such as Shell (Hazira), Indian Oil Corporation Limited (rated 'Crisil AAA/Stable/Crisil A1+') (Ennore), and Adani (Dhamra). While this creates a competitive supply environment, it also reflects strong demand. However, the strategic backing from HPCL and assured anchor demand partly insulate HPLNG and position it to gradually scale up utilisation, even amid competitive intensity. |
Liquidity Strong Liquidity should remain strong, driven by the parent entity, HPCL's demonstrated willingness and ability to provide support, if needed. Amidst the current disruptions, HPCL has subscribed to preference shares, issued by HPLNG, so as to help the latter manage interest obligations and working capital expenses. Strategic importance of HPLNG to the parent is indicative of continued support going forward as well. |
Outlook Stable Crisil Ratings believes HPLNG will remain strategically important to HPCL and will continue to scale up its capacity utilization supporting the financial risk profile of the company. |
Rating sensitivity factors Upward factors
Downward factors
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About the Company HPLNG, formerly HPCL Shapoorji Energy Pvt Ltd, was incorporated in 2013, as a 50:50 joint venture between HPCL and SP Ports Pvt Ltd. In 2021, HPCL acquired 50% stake from SP Ports, making HPLNG a 100% subsidiary of HPCL. HPLNG operates a 5 MMTPA LNG regasification terminal at Chhara, Gujarat. The terminal, which commenced operations in February 2025, operates on a pure tolling model, providing regasification services to customers, primarily HPCL. The project cost (with the cost overrun) is around Rs 4,744 crore and funded through 70% debt and balance via equity. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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