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WELL-OILED PLAN New owners propose to set up India’s largest network of private petrol pumps, build second-largest refinery and a 1,000 mw power plant; deal to help Essar Group halve its debt
Russia’s energy giant Rosneft and its partners have completed the $12.9-billion acquisition of Essar Oil, making a grand entry into the world’s most sought after energy market with plans of grabbing a larger share of the fuel retail market in India and significantly better financial performance.
The new owners, which include Trafigura, a global commodity trading and logistics giant, and UCP Investment Group, will acquire India’s largest network of private petrol pumps, the country’s second-largest refinery, a 1,000-MW power plant along with the Vadinar port and oil terminal.
After the acquisition of 49.13% stake by Rosneft and another 49.13% by Trafigura and UCP Investment Group, the new owners of Essar Oil aim to scale up the company’s petrol pump network to 6,000 outlets in India from 3,500 now. This will rev up fuel retailing market which already has Shell and Reliance Industries posing a challenge to the dominant state firms in the business, and BP Plc ready to enter the arena with a licence for 3,500 pumps.
Rosneft CEO Igor Sechin said the deal was a remarkable achievement as the Russian firm had entered the “high-potential and fast growing“ market and the new owners will make a significant difference to the company they acquired. “Together with our partners we intend to support the company to significantly improve its financial performance and, in the medium term, adopt an asset development strategy,“ he said.
The company’s new chairman and non-executive director Tony Fountain, who worked with BP and Reliance Industries in the past, said the refinery’s location and infrastructure positions the company to be a global player apart from access to the retail network.
“We want to fully optimise the commercial opportunities of Essar Oil. Our plan is to continue the retail expansion and push this to 6,000 outlets. We are also looking at the management team to prepare a plan for asset development that will outline the investment opportunities in the refinery and other opportunities,“ he said.
The acquirers plan to continue using the `Essar’ brand name for the business for the time being and will take on most of the debt and working capital liabilities. Debt and liabilities worth $ 5.4 billion would be transferred to the new entity and is a part of the $12.9 billion valuation.
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