Mumbai: India’s Essar Oil plans to raise up to $2 billion to fund expansion and expects its expanded 210,000 barrels per day Vadinar refinery to be ramped up to full capacity by March, not end-January as was expected.
It will use the proceeds for exploration and expansion of its refinery and marketing network as well as working capital needs, the company said in a statement.
Essar, India’s second-largest private oil firm, will seek shareholder approval to issue shares and/or convertible debentures in the domestic market or an issue of share and/or convertible bonds in the overseas market.
Bankers say India is likely to see about a dozen issues, including initial public offerings, which will raise more than $1 billion apiece in 2008.
The company had initially said the Vadinar refinery in the western state of Gujarat would run at full capacity by December but later sources said this was delayed to January.
Company officials said earlier this month that Essar would expand the refinery to one million bpd in the next five to seven years.
Asian and Middle East nations are building more than a dozen new refineries to feed demand in developed nations, where there has been little capacity expansion in recent years.
Private refiners, including Reliance Industries, export most of their output as they face competition from state firms, which get government subsidies to sell petrol, diesel, kerosene and cooking gas at low state-set prices.
The company also said it would consolidate its upstream activities under its proposed subsidiary, Essar Exploration and Production Ltd.