Essar Oil UK Ltd. (EOUK) has secured $150 million in financing from Hamburg Commercial Bank AG and Mizrahi Tefahot Bank Ltd. for working capital and general expenses.
The receivables portfolio support “enables EOUK to strengthen major customer relationships and increase sales volumes through the ability to offer its customers greater financing flexibility”, the refiner said in a press release Wednesday. “This financing comes at a competitive market rate for a facility of this size and nature, thereby enabling EOUK to optimize its longer term financing strategy”.
Chief executive Deepak Maheswari said in a statement, “EOUK is building for the future, with ambitions to become the UK’s first low carbon refinery”.
“Serving our customers’ needs and securing competitive financing is critical to this overall objective”, Maheswari added.
EOUK is part of Essar Energy Transition (EET), a holding company of Essar Global Fund Ltd. (EGFL) that aims “to drive the creation of the UK’s leading enegy transition hub in North West England”, as stated in a February 27 announcement by EGFL of the creation of EET. EET plans to invest $3.6 billion over the next five years in the development of low-carbon energy projects in the United Kingdom and India, the announcement said. EET’s planned portfolio includes biofuels, blue hydrogen and green ammonia according to the announcement.
Chief financial officer Satish Vasooja said of the support from the Germany- and Israel-based banks, “This financing helps us deliver a part of our capital structure on market standard terms”.
“It is a sign of the confidence the banking community has in EOUK and our long-term financial performance, while it will also support our strategy to provide better terms to customers and to increase overall sales volume”.
EGFL, a family investor based in Mumbai city, said last year it has become debt-free in India following repayments using proceeds from the sale of its ports and power assets to Arcelor Mittal NipponSteel India Ltd. for $2.05 billion. “Essar has concluded its asset monetization program and completed the debt repayment of $25 billion (INR2,00,000 crore) effectively making the group debt-free from Indian banks and financial institutions”, Essar Capital director Prashant Ruia said in a news release November 21, 2022. Essar Capital manages EGFL’s portfolio of investments.
EGFL though has maintained Indian operations across the sectors of energy, logistics, metals and retail. ” We are now reinvesting in our existing operations and in building new assets, both in India and overseas, with more efficient, latest and carbon neutral new-age technologies, which will be sustainable”, Rewant Ruia, director of Essar Ports Terminals Ltd., said in the November announcement.
In the UK, EGFL’s main project, through EOUK, is the HyNet North West hydrogen production and carbon capture and storage industrial complex. Among the components is what EOUK calls the country’s “first low-carbon refinery”. he Stanlow refinery is part of a $1.2 billion investment over the next five years for EGFL to help realize its net-zero emissions target by 2040, according to information on its website.
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