Link site

Indian refiner Nayara will find it harder to find financing due to Rosneft link – sources

A 3D printed gas pipeline is placed in front of the Rosneft logo displayed in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration

Join now for FREE unlimited access to Reuters.com

Register

NEW DELHI/MUMBAI, March 3 (Reuters) – Indian refiner Nayara Energy, part-owned by Russian oil giant Rosneft, may find it harder to raise funds for expansion due to Western sanctions in response to the invasion Russian from Ukraine, according to sources direct knowledge of the matter said.

“We are cautious even if there is limited exposure and in this case they have a majority Russian exposure through Rosneft and a Cyprus based fund, so it makes sense to pause those loan disbursements and play it safe,” said a banking source.

Nayara said in response to questions about his financing plans that he does not depend directly on banks for the expansion of his retail network, as the majority of his outlets are owned and operated by concessionaires.

Join now for FREE unlimited access to Reuters.com

Register

“Some banks provide working capital financing facilities to some of our franchisees, which are governed by the bilateral agreement between the bank and the franchisee, without any recourse against Nayara,” he said in a statement Thursday. .

Nayara is renaming its fleet of more than 6,000 retail service stations to its own Essar Oil name as it was once known, and plans an additional 3,000 outlets.

Concessionaires wishing to install Nayara’s gas stations and those renaming their facilities are struggling to secure funds from banks, the sources said.

Rosneft (ROSN.MM) has a 49.13% stake in Nayara, formerly known as Essar Oil, while a similarly sized stake is shared between global commodities trading company Trafigura and the group Cyprus-based Russian investment firm United Capital Partners.

Indian banks are awaiting clarification from Prime Minister Narendra Modi’s government and the central bank on assets and payment settlements linked to Russia, which led to the suspension of loans to companies linked to Nayara, the sources said.

Nayara operates the 400,000 barrel per day (bpd) Vadinar refinery in the Indian state of West Gujarat and plans to increase its petrochemical capacity in phases.

Nayara last year raised 40 billion rupees ($528 million) for its planned $850 million polypropylene plant, which is to be financed by a combination of debt and equity.

The sources, who spoke on condition of anonymity, said it could be difficult for Nayara to raise funds in the next round of expansion if sanctions against Russia continue.

“We are making steady progress in our petrochemical expansion, in an incremental manner, in line with our asset development strategy,” Nayara said in its statement.

($1 = 75.8270 Indian rupees)

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Nidhi Verma in New Delhi and Nupur Anand in Mumbai; Editing by Alexander Smith

Our standards: The Thomson Reuters Trust Principles.