Essar Energy PLC : Essar clarifies details of Supreme Court ruling

Essar Oil clarifies details relating to Supreme Court ruling - Supreme Court verdict deals with sales tax deferment scheme and is not an exemption in any form - As at December 31 2011, Essar Oil had collected Rs 6308 crore (US$1.235 billion) under the sales tax deferment scheme. - Based on Supreme Court ruling, any repayment schedule is expected to be agreed upon with the state government of Gujarat and/or court. - Essar Oil is examining all legal options and expects to file a review petition in the Supreme Court within the next 30 days. January 18 2012: Essar Energy plc's LSE subsidiary Essar Oil Limited today made the following announcement to the Bombay Stock Exchange: The Supreme Court on the 17th of January set aside the judgement of the Gujarat High Court which ruled in favour of Essar Oil to claim benefits under the sales tax deferment scheme in the state of Gujarat. This decision may bring forward the amounts to be repaid under the sales tax deferment scheme.

Essar Oil would like to clarify that the sales tax deferment benefit to Essar Oil was a loan repayable in the earlier of the year 2021/22 or on exhaustion of the full eligible amount, which the company had expected to occur in the year 2013-14, and was repayable in six equal annual instalments

The company's estimate is that the total amount of the sales tax deferment benefit was Rs 9100 crore (US$1.784 billion).

To date Essar Oil has utilised approximately Rs 6300 crore (US$1.235 billion) of this benefit under the sales tax deferment scheme.

Following the Supreme Court order, any repayment schedule is expected to be discussed and finalised with the State Government of Gujarat and/or be subject to court agreement.

As per previous disclosure, the sales tax deferment liability has been assigned to a third party. As of December 31 2011, the amount assigned is Rs1800 crore (US$353 million). This amount is repayable to Essar Oil to meet any payments of the deferred tax benefit in accordance with the terms of the agreement.

Essar Oil would also like to clarify further details regarding the corporate debt restructuring (CDR) scheme. The company is already in discussion with its CDR lenders for exiting the CDR. This process of exiting CDR is expected to be completed shortly.

As regards the Master Restructuring Agreement (MRA) relating to the CDR scheme, Essar Oil is required to obtain approval of the deferment of the sales tax by March 31 2012 and repay this as per the incentive scheme.

At this time there is no event of default under the MRA. Essar Oil is continuing discussions with its lenders.

Essar Oil is examining all legal options and it expects to file a review petition in the Supreme Court within the next 30 days.

Notes to editors:

1. This case relates to the Gujarat state's Capital Investment Incentive to Premier/Prestigious Unit Scheme, 1995-2000.

2. The Supreme Court of India set aside the earlier judgment of the Gujarat High Court that extended time to Essar Oil Limited for the commencement of commercial production of the Vadinar Refinery. Under the original incentive scheme the Vadinar refinery was required to commence commercial production by 15 August 2003 but the actual commencement of commercial production was after this date.

3. Essar Oil Limited is listed on the Bombay Stock Exchange and the National Stock Exchange of India and is a subsidiary of Essar Energy, which owns 87.1 per cent of the shares.

For further information on Essar Energy, please visit www.essarenergy.com

For further information on the Essar Group, please visit www.essar.com

Alternatively, please contact:

Essar Energy

Mark Lidiard, Director of Investor Relations & Communications [phone] or [phone]

Andrew Turpin, Head of Media Relations [phone] or [phone]

Capital MS&L

Richard Campbell [phone] or [phone]

Nicholas Bastin [phone] or [phone]

About Essar Energy

Essar Energy, through its subsidiaries, owns one of India's largest private power producers with 1,600MW 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 currently being expanded from 14.7 million metric tonnes per annum to 18mmtpa by March 2012, and with further plans to expand to 20mmtpa by September 2012.

About Essar Group

The Essar Group (the "Group") is a multinational conglomerate and a leading player in the sectors of Steel, Oil, Gas, Power, Communications, Shipping, Ports, Logistics, Construction and Minerals. With operations in more than 25 countries across five continents, the Group employs over 70,000 people, with annual revenues of US$17 billion.

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