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Pratim Ranjan Bose

Kolkata, July 29

Essar Oil may achieve the financial closure of its proposed capacity augmentation project at Vadinar refinery in the next two weeks.

The $6-billion project envisages enhancing the refinery capacity from 10.5 million tonnes (mt) to 34 mt in 2010.

“We are going ahead with Vadinar capacity augmentation plan. Promoters have already contributed $300 million towards the equity. Bulk of the $4-billion loan finance is already tied-up and the financial closure is expected to be achieved in a week or 10 days of time,” the Managing Director, Mr Naresh Nayyar, told Business Line.

On non-availability of income-tax holiday, he said that the company had already approached the Union Government for a review of its decision.

Though he did not answer queries on the implication of the policy reversal on the project cost and pay-back issues, Mr Nayyar maintained that the company was making fast moves to complete the project within the scheduled timeframe.

In a recent decision, the Union Government had limited the scope of tax holiday to the proposed public sector refinery projects.

The decision had put Essar’s proposed expansion project in a relatively disadvantageous situation compared to the upcoming Reliance Petroleum refinery, slated to be on stream this year.

It may be mentioned that Essar is tying up a total loan finance of approximately $5 billion to fund its other future projects, including E&P commitments during the ongoing exercise.

Another $1 billion will be generated through internal accruals.

According to company sources, loans worth approximately $4.8 billion are already tied-up from ICICI, IDBI, SBI, Standard Chartered and others.

Another $200 million is in the process of being tied up to complete the exercise.

Promoters have contributed $300 million towards equity in two tranches.

This includes a contribution of $170 million made last week. The rest will be contributed as and when the need arises.

More Stories on : New Projects | Petroleum

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