The target has been rescheduled following the recent cyclones in Gujarat, which cost the project three months of unforeseen delay. Earlier, the company had set itself a target date of June 1999.

The refinery is expected to be the third in the private sector to go on stream. Already, Mangalore Refinery & Petrochemicals Ltd has gone on stream, and Reliance Industries' enormous project is also expected to be commissioned by mid-1999.

The refinery's output will be marketed by Indian Oil Corporation (IOC) at prices determined by the Oil Coordination Committee (OCC) of the union government on the basis of landed cost of import prices. "We are on schedule after a brief jolt due to the recent holocaust of a typhoon that swept the Jamnagar area, and will definitely implement theproject within the second half of the next financial year. We are committed to the date," said a senior Essar House source.

According to the source, the company has enough funds to pay out interest on the borrowings till the project goes on stream, following which it is expected to generate steady revenue.

It has been reported in some sections of the press that the company is scouting for overseas loans. It is believed that the company is looking at a non-convertible bond as an instrument. However, nothing final has been decided on this count as yet.

The Ruias have recruited Sukhdev Singh, former managing director of Bharat Petroleum Corporation Ltd as the chief executive of Essar Oil, and hope that his experience will prove invaluable in the early years of the new business.

Essar Oil is seeking to raise some funds in the near future, but the company has not yet decided on the instruments which will be used to do so, said sources. According to recent reports, the company proposes an overseas issue,but this was not confirmed by the group.

INSIGHT

Demand-supply to be same: Commissioning the Essar refinery in October 1999, a three-month delay, would not significantly affect the demand-supply situation in the country in the first year of operation. Along with additional production avaliable from Reliance Petroleum there would be an addition of another 15 million tonnes of refined products in the Indian market in 1999-2000. This is far less than the present imports of 25 million tonnes of refined products in the country and hence the sales from private refineries should not be a problem in 1999-2000.