The Joint Lenders Forum, led by State Bank of India (SBI) and ICICI Bank, have approved Rs 86,000 crore stake sale of Essar Oil to Rosneft and Trafigura-UCP consortium in a meeting held on Friday. The transaction would be the largest Foreign Direct Investment (FDI) in India.
Twenty-three banks, led by SBI and ICICI, have permitted and authorised the release of shares of Essar Oil Limited (EOL) to facilitate closure of EOL’s stake sale to Rosneft and the investment consortium led by Trafigura and UCP.
The all-cash deal encompasses EOL’s 20 million tonnes refinery at Vadinar in Gujarat, and its pan-India network of over 3,500 retail outlets. The world-class refinery, which accounts for 9 per cent of India’s total refining output, is supported by a 1,010 MW captive power plant, and a 58 million tonnes deep draft port that helps in importing crude and exporting finished products for the refinery.
Investing in EOL, which operates one of the world’s most complex refineries and runs India’s largest private sector retail network, gives the new stakeholders a strong foothold in the Indian market that will witness robust demand growth for petroleum products in the long term. The growth for refined petroleum products in the Indian market for the next five years is expected to be in the 5 per cent-7 per cent range.
