Lender have agreed to fund Haldia Petrochemicals’ expansion plan, which had suffered cost and time overrun, as a study has found the project viable.

Sources in State Bank of India (SBI), one of the lenders to HPL, told PTI that the report prepared by Mott Macdonald said that the expansion plan, named Supermax, was viable in spite of suffering significant cost and time overruns.

“The banks have now agreed to provide the additional funding required,” the source said.

Mott Macdonald was appointed by HPL at the behest of the lending consortium led by IDBI to look into Supermax’s viability since the company had sought additional debt funding to finance the project.

While the initial project cost was put at Rs 675 crore, it had escalated to more than Rs 1,000 crore.

The project entailed expansion of the naphtha cracking capacity from 520 kilotonnes to 675 kilotonnes per annum.

Sources said that the company had informed the lenders that HPL would go for a shutdown for 45 days in October to facilitate synchronising of the project with the existing operations.

Speaking about the performance of the company, the sources said that it was better than last year when HPL had posted a loss. The company was now back in the profit zone, he said.