ESSAR ENERGY TO SELL KENYA REFINERY STAKE FOR $5 MILLION

NEW DELHI: London-listed Essar Energy Plc said on Thursday that it will exit its refinery project in Kenya by selling its 50% stake to the government of the African nation for $5 million.

Essar that had planned $400450 million investment in upgradation of the refinery to achieve optimal level of operation, said the decision follows extensive studies finding upgradation of the refinery economically unviable in the current refining environment.

The Mombasa refinery has a nameplate capacity of 4 million tonnes per annum but could process only 1.6 million tonnes last year.

“Essar Energy, through its subsidiary Essar Energy Overseas Ltd, has exercised a put option under the shareholders’ agreement to sell its stake in Kenya Petroleum Refineries Ltd (KPRL) to the government of Kenya, which owns the remaining 50% interest in the Mombasa refinery,” the company said in a press statement.

The company had acquired 50% stake in KPRL in July 2009 for $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% share of KPRL for $ 5 million,” it said.

BP, Shell and Chevron had exited the refinery in 2009, selling their cumulative 50% interest.