Essar Oil to convert over USD 1 bn rupee loan into dollar debtDecember 24, 2014
Essar Oil today said it will convert over USD 1 billion worth of rupee loan into dollar debt by March to reduce its cost of borrowings and will acquire group firm, Vadinar Power Co, for Rs 2,100 crore.
“We are continuing on our mission to dollarise debt.
Being a fully dollar-driven company, it makes immense sense for us to de-risk our business from currency fluctuations by converting our long term liabilities into dollars.
“Till date, we have dollarised about USD 1 billion of rupee debt, which besides lowering our interest cost, also extends our debt tenure. We aim to dollarise another USD 1-plus billion by March 2015,” Essar Oil Chairman Prashant S Ruia said at the firm’s annual general meeting here.
Essar Oil, a part of the Essar Group that is controlled by billionaire brothers Shashi and Ravi Ruia, will buy additional 73.99 per cent stake in group company Vadinar Power Company to make it a fully owned subsidiary. The acquisition was approved by board and shareholders in May.
“As you are aware, to achieve power security and get better control over our assets which will optimise operating cost, the company has decided to acquire the balance 73.99 per cent stake in Vadinar Power for upto Rs 2,100 crore,” he said.
The coal fired power plant, owned by VPCL, is already providing a refining margin uplift of USD 1-1.5 per barrel to the company.
Ruia said Essar Oil is undertaking a series of low capex and short gestation projects under the banner of Optima Plus, which upon completion would provide a margin uplift of about USD 1.0-1.5 per barrel over a period of the next two years.
“These projects include setting up one more Hydrogen Manufacturing Unit and the conversion of the existing Vacuum Gas Oil (VGO) into more valuable distillates,” he said.
Last fiscal, it earned USD 7.98 on converting every barrel of crude oil into fuel, which was better the industry average and came at time when global refining industry faced challenges in terms of weak demand and new capacity additions.
Its Vadinar refinery in Gujarat processed 93 per cent of heavy and ultra heavy crude, normally available at a discount to benchmark grades, against 86 per cent in the previous year.
In spite of processing such a high proportion of tough crudes, it produced 84 per cent of higher margin light and middle distillates, he said.
“Government has taken several encouraging policy decisions which has put a renewed optimism in the sector. We have seen government deregulate diesel prices and hiked gas prices, which will benefit the country in the long run in terms of fiscal discipline and energy security,” he said.
Essar Oil has begun selling diesel from most of its 1400 petrol pumps in the country after price deregulation. It was selling only petrol till now as it could not compete subsidised diesel sold by public sector retailers.
© Copyright PTI. All rights reserved. Republication or redistribution of any PTI content, including by framing or similar means, is expressly prohibited without their prior written consent.
- BJP declares first list of Lok Sabha candidates 2019; Modi to contest from Varanasi again
- Amit Shah to contest from Gandhinagar Lok Sabha seat
- Huge embarrassment for Hardik Patel; Youths chant Modi Modi before he could speak in a function at Jamnagar
- Trailer of upcoming Hindi film PM Narendra Modi released
- Swami Aseemanand, other accused acquitted in Samjhauta Express blast case
- PM Modi interacts with Chowkidars through audio bridge