The deal values Essar Oil at Rs 72,800 crore and the company will get additional Rs 13,300 crore for its Vadinar Port.
Rosneft will also acquire Essar’s 20 MTPA refinery at Vadinar and its 2,700 fuel outlets accross the country. The refinery accounts for 9 percent of India’s total refining output and is supported by a power plant with 1,010 MW capacity.
The deal, announced at the on-going BRICS summit in Goa, is expected to be completed by the end of the first quarter of 2017.
“Investing in EOL, which operates one of the world’s most complex refineries and runs India’s largest private sector retail network, gives the new stakeholders a strong foothold in the Indian market that will witness robust demand growth for petroleum products in the long term. The growth for refined petroleum products in the Indian market for the next five years is expected to be in the 5%-7% range,” Essar Oil says in a press release.
The company plans to use the stake sale amount to deleverage more than 50 percent of Essar Group’s debt, Prashant Ruia, Chairman & Non-executive Director of the Essar Energy said at a press conference.
The Group’s debt stands at around Rs 88,000 crore.