Central security agencies have raised concerns over the mega Rs 82,000 crore takeover of Essar Oil by a Russian consortium citing the proximity of its port to Pakistan and nearby defence assets, according to a government official.
The agencies have communicated to the home ministry about their security concerns over the deal, the official, who did not wish to be named, said.
A final decision on the issue will be taken by the Prime Minister’s Office as the deal, considered to be one of the largest foreign investments in the country, was signed in the presence of Prime Minister Narendra Modi and Russian President Vladimir Putin on the sidelines of the BRICS summit held in Goa last year, the official added.
When contacted, a home ministry spokesperson said a decision on granting security clearance to the proposed foreign takeover by Rosneft is yet to be taken.
“The matter is still under process,” the spokesperson said when asked whether the port in Gujarat was coming in the way of the deal.
However, an Essar spokesperson said all requisite approvals from the union government for the Essar Oil transaction to proceed are available.
“The query pertaining to seeking MoH (Ministry of Home) approval for the port has nothing to do with the present Essar-Roseneft-Trafigura-UCP deal,” the spokesperson said in response to a query from the PTI.
According to government rules, it is mandatory to take security clearance from the home ministry for any foreign investment in the country.
The deal covers Essar Oil’s 20 million tonne refinery at Vadinar in Gujarat and its retail outlets for which the Russian consortium will pay USD 10.9 billion (around Rs 70,000 crore).
The consortium, comprising energy giant Rosneft Oil Company, commodities trader Trafigura and private investment group United Capital Partners, will pay another USD 2 billion (around Rs 12,000 crore) to buy Essar’s port in Vadinar which has a capacity to handle 58 million tonnes of crude a year.
Strategically located at the southern tip of the Gulf of Kutch, Vadinar port consisting a marine terminal, crude, product and intermediate storage tankage of over 3 million cubic metre capacity, and rail and road gantries with 13 km of railway siding.
These facilities are critical for the successful operation of Essar’s Vadinar refinery.
More than 3,000 vessels have been berthed at the Vadinar port since it started operations more than a decade ago, in September 2006.