Icici To Securitise Enron-Ril Receivables
ICICI, the leading financial institution, plans to extend a line of credit worth Rs 1,250 crore to the Enron-Reliance consortium for oil production in Mukta and Panna, the developed oil and gas fields.
The deal which is currently at an advanced stage of negotiations is expected to be sealed soon.
ICICI is scrutinising the companys oil and gas production before agreeing to securitise the receivables from these fields. According to industry sources, the credit line will be spread over a few months.
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Consequently, the consortium is also expected to have a time frame of 7 to 10 years for the repayment of the loan.
The consortium has floated a special purpose vehicle to avail of this credit line.
The SPV, in turn, will transfer the said amount as an advance to produce oil from these fields. The consortium will offer its produce to the Government of India at an international price.
Sources indicate that the payments received for the oil and gas will be ploughed back to into the SPV, which will be responsible for the repayments.
Explaining the need for SPV, sources claim that this will ensure that the partners will not be individually exposed to repayment of this loan.
Reliance has an un-incorporated joint venture with Enron and Oil and Natural Gas Corp-oration (ONGC) to produce oil and gas from these developed fields.
While Enron, the field operator and Reliance each hold 30 per cent equity in the consortium, the Oil and Natural Gas Corp-oration has a stake of 40 per cent.
The consortium has incurred a capital expenditure of over Rs 1,800 crore (expenditure as on March 1997). It has already commenced production from the two oil fields Mukta and Panna to the extend of 11,500 barrels per day. The production is expected to soon touch 45,000 barrels a day.
Enron-RIL-ONGC has also enhanced gas production from these fields as it has already placed a dedicated pipeline to the landfall point at Uran.
Almost 2 million cubic meters of gas per day is being sold to Gas Authority of India Ltd (GAIL), the sole gas distributing company.
Earlier, the consortium used to flare over 1 million cubic meters of gas from these fields for lack of a gas pipeline.