Essar Oilآ’s Vadinar refinery project not eligible for OIDB loan

Vol 7, PW 25 (10 Mar 04) News in Brief
     

Essar Oil clearly didnt do its homework before approaching the oil ministry-sponsored Oil Industry Development Board for a loan.

Early last month, Essar Oil wrote to oil minister Ram Naik repeating its request for a Rs1, 334cr ($277m) OIDB loan for its Vadinar refinery, which is under construction. To complete the refinery project, we have approached the OIDB for sanction of a loan, Naik was told.

The OIDB is a forum meant to finance oil projects for the development of the petroleum industry in India. Essars request will be turned down because, funding a private refinery project does not fall within the OIDBs scope of work.

We are also told the OIDB is only permitted to give low interest loans for state-owned or joint venture projects in which the government-owned company has at least 26% stake. OIDB loans for such joint ventures require a guarantee from the state-owned partner.