The board of Industrial Development Bank of India (IDBI) on Thursday cleared the proposal for the resumption of work on Essar Oil's refinery project. Work on the project is expected to be completed within 18-24 months from the date of commencement. The project has achieved full financial closure with tying up of entire debt component and with the requisite equity in place. ICICI had earlier cleared the resumption of work on the project. Essar Oil is currently implementing the 10.5-million tonne per annum refinery project at Vadinar in Gujarat. The total cost of the project is Rs 8,000 crore and is funded through an equity of Rs 2,148 crore and a debt of Rs 5,852 crore.

The Ruias and their associates would hold an enhanced stake of 67 per cent in the refinery project. ABB Lumus would also provide deferred credit of $43 million and bridge funding of $48 million, along with Larsen & Toubro has guaranteed to complete the project.

Essar Oil has completed 64 per cent of the work on the refinery and has already incurred Rs 6,300 crore till June this year. All major plant and machinery valued at $430 million have arrived at the site and another $200 million worth of equipment is ready for shipment. The project has natural deep draft suitable for berthing very large crude carriers and is closer to the source of crude supply.

Meanwhile, Vadinar Oil Terminal Ltd (VOTL), a fully-owned subsidiary of Essar Shipping Ltd (ESL),has also tied up Rs 500 crore equity for its terminal project. Of the Rs 500 crore, Rs 450 crore has already been invested by ESL and the balance would be brought with the progress of the project, said sources.

VOTL would provide all necessary infrastructure facilities like handling of crude oil and storage for the EOL project. It has a capacity to handle 34 million tonne of crude oil and 14 million tonne of petroleum products. The terminal is expected to be commissioned six months prior to the commissioning of the refinery.