Hudco may part-fund Essar's all-weather port in Jamnagar

Essar Shipping, a part of the Rs 17,000 crore Essar Group, is expected to commission its all-weather port at Vadinar in Jamnagar district of Gujarat in the next 18 months.

The port will be used by Essar Oil Ltd for operations in its upcoming oil refinery.

The Housing and Urban Development Corporation Ltd (Hudco) has been considering a proposal to partially fund the port project following a request from Essar.

"Essar Shipping has filed an application seeking Rs 366 crore for its upcoming oil terminal and port in Jamnagar, a part of the oil refinery project. Essar Shipping is setting up the all-weather port at a cost of Rs 1,874 crore. They have sought partial funding from us," said a senior Hudco official on Wednesday.

The port will have a capacity to handle 34 million tonne per annum (MTPA) of crude oil and 14 MTPA of other products.

It is developed within the premises of the oil refinery, which is scheduled to be commercially commissioned in the next two years.

Essar has created a separate entity, Vadinar Oil Terminal Ltd, which will act as a 100 per cent subsidiary of Essar Shipping, to handle all affairs of the port.

"The terminal is already under construction and Essar Shipping has got the single-buyer mooring for the project. Hudco and other financial institutions are roped in to finance the Rs 1,874 crore terminal. Internal accruals also may be used for the project. The terminal will be mainly used to receive crude and evacuate the product. It will also act as a supporting instrument for the 10.5 MMTPA oil refinery at Vadinar," said a source close to Essar Oil.

On completion, the refinery is expected to output 55 lakh tonnes of diesel and 22 lakh tonnes of petrol annually besides other petroleum products such as LPG, Kerosene and naphtha, within the next two years.

Essar Oil is also in the process of working out an oil sourcing arrangement and putting in place infrastructure facilities for its retail network.

Essar Oil has already spent Rs 6,300 crore on this project, while investment has also been made in the Vadinar-Kandla pipeline and central India pipeline for carrying the products as well as crude.

Essar is also exploring the possibility of setting up a 1,200 MW power plant at Jamnagar, based on residue from the refinery as fuel.