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Mumbai, Nov. 16 The Board of Essar Oil approved the issue of global depository shares to the promoters on a preferential basis, with a maximum limit of $2 billion (Rs 8,000 crore), at an effective price of Rs 200 per share for the underlying equity shares.

The promoters of the company have also decided against delisting the company’s shares from the stock exchanges, said a statement from Essar Oil, issued after its board meeting on Friday. (In January this year, the Ruias, promoters of the Essar Group, had announced their intention to delist both Essar Steel and Essar Oil from the bourses.)

The company’s share price, which more than doubled over the last week, touched its 52-week high of Rs 209.20 on Friday. Its closing price on the BSE was Rs 192.35, 22.01 per cent higher from its previous close of Rs 157.65.

The preferential issue will generate funds for Essar Oil’s expansion plans entailing an investment of $6 billion (Rs 24,000 crore).

This investment is intended to triple the capacity of its Vadinar refinery to 34 million tonnes per annum (mtpa) (700,000 barrels per day) from 10.5 mtpa (220,000 barrels per day).

The capacity expansion will would be completed by 2010, said the company statement.

The Nelson Complexity Index of the refinery after the expansion to 34 mtpa will be about 12.8. The index measures the ability of the refinery to upgrade the crude to best quality and maximum quantity of value-added refined products.

The first stage of expansion will involve addition of more sophisticated bottom upgrading units such as delayed coker.

The second phase will see a new set of distillation units, including addition of all secondary units and another coker, the release said.

The basic engineering design for the expansion has been completed, said the statement.

After the expansion, the refinery will be able to handle a wide range of crudes from light to heavy and take advantage of the market differential between heavy and light crudes. It will produce petroleum products, which will meet Euro IV and Euro V international environmental norms, the release said.

The current installed capacity of the refinery of 10.5 mtpa was created at an investment of approximately $3 billion (Rs 12,000 crore).

The expansion plans at Essar Oil extend to its marketing network, which will be doubled, from 1,250 oil retail stations to 2,500.

Essar Oil Ltd is a part of Essar Energy Holdings Ltd, which in turn is a subsidiary of Essar Global Ltd.

Essar Energy Holdings Ltd is a fully integrated oil company of international size and scale.

Its assets include developmental rights in proven exploration blocks in India and abroad.

More Stories on : Petroleum | Overseas Borrowings | Stocks | Preferential Allotments

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