USD13-billion deal between Essar Oil and the Rosneft-led consortium has been red-flagged by IB

USD13-billion deal between Essar Oil and the Rosneft-led consortium has been red-flagged by IB

New Delhi, June24:The mega $13-billion deal between Essar Oil and the Rosneft-led consortium has been red-flagged by the home ministry and Intelligence Bureau (IB).

Government sources told 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.

It is believed the home ministry and IB have raised concerns of the Kremlin-owned company – Rosneft – being in control of Essar’s Vadinar port. Its objections are based on the port’s proximity to the border with Pakistan, and also of 3-4 defence installations being in the vicinity.

Responding to ET Now’s questionnaire, 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% 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. ET Now learns the Prime Minister’s office will take the final call on whether the Vadinar port should be a part of the transaction.

Earlier in the day, nearly 23 banks, part of Essar Oil’s Joint Lenders Forum, approved the transaction with the Rosneft-led consortium.

 It was the lenders that had earlier not given their no-objection certificate, and had thus led to the deal missing its closing deadline of March 31, 2017.
  Home ministry sources said the file relating to security clearance for the Essar-Rosneft deal is still pending for a decision.
 “No decision has been taken as yet on security clearance to the venture. The committee of officers is still to meet to discuss the case.There may be some intelligence inputs, the details of which will be put up before committee, for consideration,” a senior home ministry official told news media
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