Cairn to get $150m IFC loan to develop Rajasthan oil find

MUMBAI:International Finance Corporation (IFC), the private sector arm of the World Bank Group, will lend $150m to Cairn Energy. The loan is to part-finance UK-based Cairn’s $1bn capital expenditure programme, primarily the development of its recent discoveries in Rajasthan. With a target peak production of around 1,50,000 barrels per day, the Rajasthan development will equal around 25% of India’s current oil production and about 8% of its current oil imports, when fully developed.

Cairn operates Block RJ-ON-90/1 under a production sharing contract (PSC) signed on May 15, ‘95. The development area, which includes Mangala, Aishwariya, Saraswati and Raageshwari, is shared between Cairn and ONGC, with Cairn holding 70% and ONGC having exercised their back in right for 30%.

“With our investment, we are supporting the local economy and helping to satisfy India’s demand for domestically produced fuel,” said Iyad Malas, IFC’s director for South Asia. A central component of the Cairn-IFC development programme is the establishment of an enterprise centre, to provide information and expertise on business practices to local small and medium-sized firms.

This will allow them to become potential suppliers and service providers to the oil and gas operation and other ventures. The enterprise centre is part of a joint community development plan that aims to maximise positive impacts of the large-scale oil and gas projects in Rajasthan, where more than 20% of households live below the poverty line.

IFC’s 9-year term loan and IFC’s social and environmental due diligence have given a group of international commercial banks assurance to provide $850m in 5-year term funding.