The promoters of the Essar Oil will have to infuse an additional Rs 311 crore (Rs 3.11 billion), while the ABB group will have to pump in Rs 905 crore (Rs 9.05 billion) as a part of the package cleared by the corporate debt restructuring cell on Monday.
In lieu, of ABB's contribution it will pick up a stake in the project.
Further, ABB will also bring in another $93 million as deferred credit.
The lenders consortium comprising of banks and financial institutions in turn will give additional loans of Rs 1,334 crore (Rs 13.34 billion) and release Rs 500 crore (Rs 5 billion) of the loans sanctioned earlier.
Further, the lending rates will be lowered to between 11 and 14 per cent from the prevailing rate of about 17-18 per cent.
The entire package is backed by the personal guarantee of the promoters and the pledge of 51 per cent of their holding in Essar Oil, sources in the lenders consortium said.
Essar Oil had kicked off its ambitious plans to set up a refinery at Vadinar in Gujarat but this had run into rough weather.
Work on the 12 million refinery had stopped in October 1998.
The cost of the project was then pegged at Rs 8,000 crore (Rs 80 billion). There are now varying estimates of project cost.
While institutional sources have pegged the total cost of the project at Rs 11,728 crore (Rs 117.28 billion), sources close to the Essar group pegged it at Rs 9,863 crore (Rs 98.63 billion).
The difference is due to the assumptions made on the interest accrued between October, 1998 and June 2003 (the period of work stoppage).
Under the terms of the agreement, if the interest is repaid in 5 years it will amount to Rs 400 crore (Rs 4 billion). On the other hand, if it is repaid in 20 years it will come to about Rs 2,283 crore (Rs 22.83 billion).
The Essar group has factored in a repayment period of 5 years, while the lenders have based their calculations on a 20-year repayment period.
The cost of the terminal that goes with refinery has been pegged at Rs 3,219 crore (Rs 32.19 billion) against the earlier Rs 1,874 crore (Rs 18.74 billion). The refinery project has an equity component of Rs 3,023 crore (Rs 30.23 billion) and a debt component of Rs 8,705 crore (Rs 87.05 billion).
The completion of the project in the next 24 months has been guaranteed by ABB and L&T.
The loan has to be repaid over a 12-year period after the completion of the project.
