Essar Group has asked Nayara Energy to pay nearly $350 million for a brand licensing deal struck 5 years ago when Essar Oil was sold to a Russian-led conglomerate, instead of staggering the payments. said sources familiar with it.
Essar, created by brothers Shashi and Ravi Ruia, sold Essar Oil for about $13 billion to a group backed by Russian oil major Rosneft in 2017 as part of efforts to raise funds to settle $25 billion owed to Indian banks. was.
At the same time Essar Oil, now known as Nayara Energy, and Essar affiliate Abhinand Ventures Private Limited signed a 99-year deal that paid Nayara $32 million for 20 years and $1 million for 79 years. It was allowed to use the Essar brand by paying an annual license fee of Rs.
This gave Abhinand Ventures the right to charge a 15-year license fee, using some exemptions, after the 5-year lock-in period expires, three sources told Reuters.
An Essar said, “A long-term brand agreement has provided for the payment of a license fee by Nayara for the use of the Essar brand. Any payment by Nayara is merely a discharge of an existing contractual obligation and is in the ordinary course of business.” the spokesperson said.
Nayara, which says it has more than 6,000 fuel stations across India, did not respond to a Reuters request for comment.
Sources said that Essar wants to clear its debt by December after repaying 90% of the dues to banks.
Sources said Naira made a profit in the second quarter through the processing of concessional Russian oil and fuel exports in July-September, with Abhinand Ventures expected to complete the payment this month.
Essar, with annual revenue of $15 billion, is using the money to decarbonize its assets, including the 10 million tonnes per annum (MTPA) Stanlow refinery, a planned blue hydrogen production center in the UK, an iron ore mine and a pellet project. wants to the USA, a 20 MTPA port, and a power plant in western India.
In the next few days, Essar is expected to get $2.4 billion through the sale of a port and power plant to ArcelorMittal Nippon Steel Ltd (AM/NS), which acquired its steel plant in 2019.
An Essar spokesperson said, “We aim to settle our debt by the end of this year and invest in clean business and digitization.”