Essar Energy to sell its stake in Kenya Petroleum
03 October 2013
Essar Energy, Essar Group's energy firm listed in London, said it intends to sell its entire 50 per cent stake in Kenya Petroleum Refineries Ltd (KPRL) for about $5 million.
KPRL operates an oil refinery in Mombasa, Kenya.
Essar Energy, through its subsidiary Essar Energy Overseas Ltd, has exercised a put option under the shareholders' agreement to sell its stake to the Government of Kenya, which owns the remaining 50 per cent stake in the refinery.
This decision by Essar Energy follows an extensive series of studies by international consultants into the technical, economic and funding elements of an upgrade of the Mombasa refinery.
Following these studies, Essar Energy believes that the upgrade is not economically viable in the current refining environment.
Essar Energy will continue to work closely with the Government of Kenya to ensure a smooth transition of ownership.
The company had acquired the 50-per cent stake in KPRL in July 2009 for a total of $7 million from BP, Chevron and Royal Dutch Shell.
Under the terms of the shareholders' agreement established with the Government of Kenya at the time of the acquisition, Essar Energy has the right, under certain conditions, to exercise a put option under which the Government of Kenya would buy Essar Energy's 50-per cent share of KPRL for $5million.
Essar had appointed former Indian Oil Corp (IOC) acting Chairman B M Bansal as chief executive officer of KPRL.
Essar Energy said it will continue to work closely with the Government of Kenya to ensure a smooth transition of ownership, it said.