* Q3 net loss 39.86 billion rupees on one-time debit
* Current dues for Iran imports stood at about $1.2 bln
* To raise 30 bln rupees in equity capital in 12-15 months
By Nidhi Verma and Anurag Kotoky
NEW DELHI, Feb 17 Essar Oil, the
second biggest Indian client of Iranian oil, will continue to
buy 100,000 barrels per day from the Islamic country in the next
fiscal year starting April 1 for its Vadinar refinery in the
western state of Gujarat, Chief Executive L.K. Gupta said.
Essar Oil, 87 percent owned by London-listed Essar Energy
, also said it planned to raise about 30 billion rupees
($609 million) in 12 to 15 months, after posting a net loss in
its fiscal third-quarter ended December.
Iran accounts for about 11 percent, or 350,000-400,000
barrels per day (bpd), of India's oil imports and is the South
Asian country's second-largest crude oil supplier.
Tehran is facing Western sanctions over its nuclear plans
that many suspect is aimed at making a bomb.
The sanctions make it tough for importers to pay for Iran's
oil. Indian purchases have been fraught with payment problems
since December 2010 after a clearing mechanism was scrapped.
"We have agreement with Iran valid till March 31, 2013. It
is more or less same volume presently," Gupta of Essar Oil told
reporters after the company announced its quarterly results.
Up to now India has defied financial sanctions imposed by
the United States and European Union to punish Iran over its
disputed nuclear programme. New Delhi has come up with elaborate
trade and barter arrangements to pay for oil supplies.
Gupta said Essar's current dues for Iran imports stood at
about $1.2 billion.
Essar aims to expand its 14 million tonnes/year (280,000
bpd) Vadinar refinery to 18 million tonnes/year (360,000 bpd)
capacity by March and to raise the capacity to 20 million tonnes
or 400,000 bpd by September.
Essar Oil posted a net loss of 39.86 billion rupees for
October-December, mainly hit by one-time debit of 40.15 billion
rupees toward deferred sales tax payments, the company said in a
Essar Oil has filed a petition in the Supreme Court seeking
to review a judgment that prevents it from deferring payment of
a sales tax. It had earlier deferred $1.24 billion under a tax
benefit provided by the Gujarat government.
The provision pulled down the networth of Essar Oil by more
than half, and to boost liquidity the company plans to raise 30
billion rupees and ask its parent Essar Energy to convert its
dollar convertible bonds worth 13.96 billion rupees to equity.
Gupta did not elaborate on possible routes for raising fresh
Despite the increase in its refining capacity, Essar will
not raise its intake of Iranian crude and does not see any
problem if sanctions adversely impacts Iranian supplies, he
"Although uptil now we continue to get contracted volumes,
in case there is any contingency, given our suppliers base we
have for our capacity, we will be able to procure crude for our
refinery," he said.
With the expansion of its refinery, Essar is also increasing
the complexity of its Indian refinery to process more heavy and
ultra heavy grades to improve refining margins.
Gupta said substantial part of ultra heavy crude required
for expanded capacity has been tied up from Latin American
countries like Brazil and Colombia, and the Middle East.