A consortium of 23 lenders led by State Bank of India on Friday cleared the Rs 86,000-crore sale of Essar Oil to Russia’s Rosneft-led group after the Ruias agreed to clear a part of the Rs 26,000-crore loans, including that of life Insurance Corporation.
Essar Group sources said they hope to conclude the $12.9-billion all-cash deal to the Russian Government- controlled Rosneft by July 10. This is the largest foreign investment in the country till date. When asked whether the 23 lenders also include lIC, to which the company owes Rs 1,290 crore, an official answered in the affirmative.
According to the sources, the agreement came in after the Ruias agreed to clear most of the Rs 26,000-crore dues to the lenders on completion of the transaction and transferring the remainder to a new owner, which is better-rated. Sources did not elaborate on how much of the existing loans will be cleared though.
“The fact is that lIC has nothing to do with Essar Oil. The Rs 1,290-crore loan from lIC is towards Essar Power. But still we decided to clear that loan by agreeing to pay Rs 850 crore to lIC,” an Essar official told PTI.
It can be noted that lIC's refusal to clear the sale was one of the biggest stumbling blocks to the completion of the largest corporate deal in the country that was signed on October 15 last year in the presence of Prime Minister Narendra Modi and Russsian President Vladimir Putin in Goa on the sidelines of the BRICS summit.
The Rs 86,000-crore transaction involves the Ruias completely exiting its cash cow to Russian giant Rosneft and a consortium led by Trafigura-UCP. “The joint lenders forum of 23 lenders led by SBI and ICICI Bank met here this morning and approved and authorised the release of shares of Essar Oil to facilitate the stake sale to Rosneft and the investment consortium led by Trafigura and UCP,” the company said. The refinery at Vadinar on the west coast of Gujarat has a debt of Rs 26,000 crore. Out of this, SBI alone has around Rs 3,500 crore. While a text message to SBI did not elicit any response to confirm the development, an ICICI Bank source confirmed it. Igor Sechin, chief executive of Rosneft, had told the company’s AGM yesterday in Moscow that the transaction with Essar Oil could be ‘considered as closed’.
The deal involves the 20-million tonne per annum or a 4,05,000-barrels-a-day refinery in Vadinar, along with 3,500 oil retail outlets across the country (making it the largest private sector fuel retailer), a 1,010-mw captive power plant, and a 58 million tonne port facilities. The refinery accounts for almost 9 per cent of the country's total oil refining output, according to the company.