Home ministry, IB not happy about Essar-Rosneft deal?
24 June 2017
The mega $13-billion (Rs85,000 crore) deal between Essar Oil and a consortium led by Russia's Rosneft has been red-flagged by the home ministry and Intelligence Bureau, a report today said.
Government sources told TV channel ET Now that the home ministry and IB have objected to the Vadinar port being a part of this transaction, which has been hailed as India's largest foreign direct investment (FDI) deal and signed last year in the presence of Prime Minister Narendra Modi and Russian President Vladamir Putin in Goa at the sidelines of the BRICs Summit.
This comes even as another report in The Financial Express says banks led by State Bank of India and ICICI Bank on Friday cleared the decks for Essar Oil's stake sale to Rosneft and the investment consortium led by Trafigura and UCP.
Citing sources, it added that banks have approved and authorised the release of shares of Essar to facilitate closure of the stake sale.
Bloomberg reported on Thursday that Rosneft chief executive officer Igor Sechin said at the Moscow-based company's annual general meeting that the legal decision on Rosneft's guaranteed entry in Essar was formalised. ''After some technical procedures are done, we'll consider the deal closed,'' he said.
But according to ET, it is believed the home ministry and IB have raised concerns of the Kremlin-owned company being in control of Essar's Vadinar port. Its objections are based on the port's proximity to the border with Pakistan, and also to 3-4 defence installations in the vicinity.
Responding to ET Now's questions, an Essar spokesperson wrote, " All requisite approvals from the 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."
Rosneft, a Russian bank UCP & a Swiss commodity trading firm Trafigura are paying $13 billion to buy a 98 per cent stake in Essar Oil that includes India's second largest refinery at Vadinar and nearly 3,000 fuel retail outlets. Out of the $13 billion, nearly $2 billion is for the 58million-tonne deep draft Vadinar port that helps in importing crude and exporting finished products.
The Prime Minister's office will take the final call on whether the Vadinar port should be a part of the transaction, ET Now says.