Indias Essar Energy has said that it is planning to sell its 50 per cent stake in the Kenya Petroleum Refineries Limited (KPRL) situated in Mombasa, to the Kenyan government
Essar Energy bought this stake in KPRL in 2009 for US$7mn from BP, Chevron and Royal Dutch Shell.
According to a company statement, Essar Energy said that it will exercise a US$5mn put option it had in its shareholder agreement with Kenya's government, which owns the other 50 percent of KPLR, and which gave it the right to sell its stake to the state under certain conditions.
Essar Energy had earlier planned to increase the refinery's crude handling capacity to four million tonnes of crude per year (79,000 bpd) by 2018 from the present annual output of 1.6mn tonnes. The company had also announced plans to invest up to US$1.2bn for upgrading the facility.
But the company’s consultants advised Essar Energy that the proposed upgrade is not economically viable in the current refining environment, Essar Energy said in a statement.
Essar Energy added that it will continue to work closely with the Government of Kenya to ensure a smooth transition of ownership.
