Odisha Slurry Pipeline Infrastructure (OSPIL), which owns the pipeline carrying iron ore to Essar Steel, has not been receiving payments from the steelmaker, Sunil Kanoria, vice-chairman, Srei Infrastructure Finance, has confirmed. Essar Steel is currently in the midst of a corporate insolvency resolution process. Kanoria told FE that since the pipeline is a leased asset, payments should have been regular. “It’s an operating expense and the company should have paid the monthly rentals. The company is using the asset, but not paying,” he said. OSPIL owns the pipeline that carries iron ore from Odisha to Paradip port, from where the ore is sent to Essar Steel’s plant in Hazira, Gujarat. The remaining 30% is held by Essar Steel. India Growth Opportunities Fund, floated by Srei Infrastructure, holds a 70% stake in OSPIL. Essar Steel is being administered by interim resolution professional Satish Kumar Gupta with the consent of its committee of creditors.
Emails seeking responses from Gupta and State Bank of India (SBI), which had moved the insolvency petition against Essar Steel, remained unanswered till the time of going to press. Earlier this year, lenders to OSPIL had moved the Delhi High Court seeking a stay on the sale of a 70% stake in OSPIL to Numetal Mauritius. Numetal had entered into an agreement to buy a 70% stake from Srei Infrastructure for Rs 4,000 crore. Numetal, a joint venture between Russia’s VTB Bank and Rewant Ruia’s trust, has made a bid for Essar Steel under the Insolvency and Bankruptcy Code (IBC), as has Lakshmi Mittal’s ArcelorMittal. Essar Steel owes lenders close to Rs 45,000 crore. There have been two rounds of bidding for Essar Steel and contenders for the company are now quibbling in the courts over which round should be considered for the sale of the company.
In May, Numetal argued in the National Company Law Appellate Tribunal (NCLAT) that the resolution plans submitted in the second round of bidding should be considered and the highest bid be selected. ArcelorMittal, on the other hand, opposed the petition to allow the second round of bids to be opened, and said only the first round of bids should be considered. ArcelorMittal is understood to have made an upfront offer of Rs 30,500 crore and pledged another Rs 8,000 crore in the form of capital infusion into Essar Steel. Mukul Rohatgi, counsel for Numetal, told the NCLAT that Numetal has severed its association with Rewant Ruia, son of Essar Steel promoter Ravi Ruia, to become eligible to buy the steel company. Moreover, he said, it has also enhanced the bid amount to Rs 37,000 crore.