Naik SOS to Jaswant Singh over Essar refinery

Vol 6, PW 15 (25 Sep 02) Midstream & Downstream

ESSAR OIL CAN count on oil minister Ram Naik as one of its well-wishers! Particularly over its tireless efforts to kick-start the stalled 10.5m t/y Vadinar refinery project.

We understand Naik wrote to finance minister Jaswant Singh in August seeking an "early decision" on whether investment bankers ICICI and IDBI could release loans for the project. Naik is worried that Rs6,000cr ($1.2bn) has been spent on the refinery but that it "remains incomplete as no progress has been made (on issues concerning the finance ministry) in the last three years".

Naik is careful not to be seen as an Essar stooge by copying to Singh a letter from Essar director Prashant Ruia and several letters from Essar's principal tormentor, the MP Amar Singh. Ruia wants Naik to advise the finance ministry not to be swayed by "baseless allegations made by certain vested interests (who) are trying to stall the progress of the project." Adds Ruia: "Since the project has already been delayed for over two years any further hold up could do irreparable damage and make it difficult to complete." Ruia's concern is understandable.

Singh (acting alone or on behalf of others) is on a letter-writing campaign to all and sundry including prime minister Atal Behari Vajpayee, attacking each of Essar's projects, be it the refinery, the Ratna award or its coal bed methane contracts. Singh's principal allegation is that Essar is bankrupt and "guilty of diversion of funds on a huge scale." Essar is especially keen to kick-start the refinery because Gujarat sales tax benefits are only available till August 2003.

Singh however argues that the refinery will not be completed before 2004 and is "unviable."