Help at hand

Calcutta, Jan. 21: ABB is ready to provide Rs 905 crore as bridge equity to Essar Oil, which is setting up a 12-million-tonne refinery at Jamnagar in Gujarat. The promoters are, however, required to invest Rs 311 crore as equity in the project.

Confirming the development, a senior executive of Essar group said ABB’s fund, if required, could be used by Essar Oil to complete the greenfield project.

ABB has been associated with the project as the engineering, procurement and construction contractor. The transnational conglomerate has also offered all assistance to Essar Oil so that the project can be completed by the third quarter of 2005.

Essar Oil, a flagship company of the Rs 17,000-crore Essar group, has already reached financial closure and the necessary documentation, required by lenders, is currently going on, the executive said.

“The debt-equity ratio for the project is now pegged at 2.26:1 and the entire fund has been tied up,” he said.

Essar Oil has raised the projected capacity of the refinery at Jamnagar from 10.5 million tonne to 12 million tonnes per annum. The cost of the project has also been increased from Rs 8,000 crore to Rs 9,874 crore.

The company has already pumped in Rs 5,300 crore in the project and about 64 per cent of work has been completed.

The executive further pointed out that the technology being used in the project will enable the company to use a great variety of crude for processing.

The company, which is now on a recruitment spree, will provide direct employment to over 2500 people when the project is completed. During construction around 10,000 people would be needed.

Meanwhile, Essar Oil has decided to set up around 2500 petrol pumps over the next three to four years. The company has already set up three pumps, two in Maharashtra and one in Gujarat. “Another nine outlets will come up by February 15,” the executive said.

“We need to invest around Rs 350 crore in our retail project while the franchisees will make the additional investment,” he added.

Focus on retailing has been strengthened so that the marketing network is prepared when the refinery is ready for commercial production. The company has already started retailing of diesel and petrol through its own petrol pumps as well as to bulk consumers.

While the company has tied up with Mangalore Refinery and Petrochemicals Ltd for assured supply of petroleum, it is importing diesel in bulk volume.