Essar Energy Regulatory News (ESSR)

Essar Oil secures loan facility to repay deferred sales tax liability

July 23, 2012: Essar Energy plc [LSE: ESSR], the India-focused integrated energy company, today announced that its subsidiary Essar Oil Ltd has secured a new credit facility with its Indian banks of up to Rs.50 billion (c.US$900 million) to meet the deferred sales tax liability of Rs.61.69 billion (c.US$1.12 billion) owed to the Government of Gujarat.

Essar Oil continues to pursue the matter of a schedule for repayment of the sales tax liability both by legal means and with the Government of Gujarat. Essar Oil is confident that with this Rs.50 billion facility in place it will be in a position to meet its entire repayment obligations.

Lalit Gupta, managing director and chief executive officer of Essar Oil, said: "The new loan facility will enable Essar Oil to meet its sales tax liability. Our lenders have continued to be very supportive of the business, which remains well placed given the demand for high value fuels both in India and internationally."

As previously announced, the completion of the Vadinar refinery phase 1 expansion and the early completion of the additional optimisation project at Vadinar complete the scheduled capex programme for the refinery.  With its benchmark low operating costs and enhanced scale and complexity, Vadinar is expected to deliver significantly enhanced margins and cash flow generation in future.

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About Essar Energy

Essar Energy (LSE:ESSR) is a world class, low-cost, integrated energy company with an established track record.

Essar Energy, through its subsidiaries, owns one of India's largest private power producers now with 2,800MW of installed capacity and projects under construction to expand its capacity to 9,670MW.

Essar Energy, through its subsidiaries, owns one of India's fastest growing private sector oil and gas companies with a diverse portfolio of exploration and production assets. The Vadinar refinery, located in Gujarat, is India's second largest private sector oil refinery with throughput capacity of 20 million metric tonnes per annum, or 405,000 barrels per day following the completion in 2012 of expansion and optimisation projects.

About Essar Group

The Essar Group is a global conglomerate and a leading player in the sectors of Steel, Energy (Oil & Gas and Power), Infrastructure (Ports, Projects & Concessions) and Services (Shipping, Telecom, Realty and Business Process Outsourcing). With operations in more than 25 countries across five continents, the group employs 75,000 people and has revenues of over US$ 27 billion.

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This announcement contains certain forward-looking statements, including statements regarding Group's plans, objectives and performance. Such statements relate to events and depend on circumstances that may occur in the future and are subject to risks, uncertainties and assumptions. Although the Group believes that the expectations reflected in such forward looking statements are reasonable, there are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, without limitation, the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the Oil and Gas, Power and Energy industries; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. Further information on the significant risks and uncertainties associated with the Group's business is set out in the Prospectus published on 4 May 2010. These forward-looking statements speak only as at the date of this document. The Group undertakes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise, except to the extent legally required.

These statements (and all other forward-looking statements contained in this document) are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those expressed or implied or forecast in the forward-looking statements.

This announcement does not constitute, or form part of, an offer or any solicitation of an offer for securities in any jurisdiction, or an invitation or inducement to invest in the Group or any other entity and should not be relied upon in any way in connection with any investment decision.