Essar's Trinidad project faces uncertainty

The Ruias-controlled Essar Steel’s $2-billion investment in Trinidad and Tobago is hanging in balance as its lead banker has fallen pray to the financial meltdown. The bank’s crisis may delay the funding of the project and also the construction work, said informed sources.

In 2005, Trinidad-based Clico Investment Bank (CIB) got the mandate and began the process of arranging the initial $600 million to finance the first phase of Essar’s 2.5 million tonne per annum (MTPA) integrated steel plant at Point Lisas Industrial Zone in Couva. But the project of Essar Steel Caribbean (ESCL), a subsidiary of Essar Steel, has not made much progress since then due to delays in getting clearances, said sources.

“CIB, a subsidiary of CL Finance, had planned to finance the project through a syndicated financing facility for a 12-year term.

Following the delay in getting clearances, the bank also slowed down its fund raising plans. Recently, the government has given environmental clearance to the Essar project after years-long efforts.

But the fresh problem with the lead banker will adversely affect the project. The Trinidad government’s recent plans to rescue the bank give hopes to the project,” said sources.

An Essar Steel spokesperson said, “As a policy, we do not comment on speculation or speculative reports.”

Essar’s natural gas supply contract with the National Gas Company (NGC) for the proposed steel plant is also left in a limbo due to various other reasons, reported Trinidad media.

“ESCL has been dogged by rumours that it was no longer committed to the project, and that its office at Atlantic Plaza was working with a skeleton staff; that its financiers were no longer aboard; and that senior staff, including head of human resources and administration Prem Singh, had packed up and left,” reported the media.