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Home Ministry and IB caution against Essar-Rosneft multi-billion deal over Vadinar port

The objection over the deal comes from the fact that this deal will put Rosneft in control of the Vadinar port in Gujarat.

BT Online   New Delhi     Last Updated: August 21, 2017  | 08:21 IST
Home Ministry and IB caution against Essar-Rosneft multi-billion deal over Vadnir port

Home Ministry and Intelligence Bureau (IB) have red flagged the consortium between Essar Oil and Russian oil company Rosneft over security concerns, stated a report by the Economic Times.

Quoting government sources, the report stated that the Home Minstry have reservations about the deal originate from the Vadinar port being a part of the deal. Under what has been hailed as India's biggest FDI deal, $13 billion, or Rs 84,000 crores, will be paid by Rosneft, a Russian bank UCP and a Swiss commodity trading form for 98 per cent stake in Essar Oil. This will cover India's second largest oil refinery at Vadinir and around 3,000 fuel stations across the country, the report said.

The objection over the deal comes from the fact that this deal will put the Kremlin-owned Rosneft in control of the Vadinar port in Gujarat. More than Rs 13,000 crores will be paid for the 58 million tonne deep draft port used for importing crude and exporting finished products, the report read. The port is close to the Indo-Pakistan border and even has some defence installations nearby.

The Essar-Rosneft deal was signed between Prime Minister Narendra Modi and his Russian counterpart Vladimir Putin during the BRICS summit in 2016. Now the Prime Minister's office is expected to decide whether the Vadinar port will be a part of the deal or not, the report said.

"All requisite approvals from Govt of India for the Essar Oil transaction to proceed are available. Your query pertaining to seeking Ministry of Home approval for the port has nothing to do with the present Essar-Roseneft-Trafigura-UCP deal. Hope this clarifies the matter adequately," an Essar spokesperson was quoted in the ET report.

Meanwhile, Essar Oil's Joint Lenders Forum lenders, comprising of 23 banks, approved the Essar-Rosneft deal earlier today. Now the company expects to complete the deal by the earlier half of July. The influx of foreign exchange the deal will bring is expected to boost the banking system of India. Around 90 per cent of the proceeds from the deal will be used to repay the 23 banks including SBI, ICICI, PNB, IOB and others.

Notably, the lenders had refused to award no objection certificate to the deal which led to the deal missing its earlier deadline of March 31 this year.

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