Essar Headquarters, Mumbai
Nairobi – Indian-focused energy firm Essar Energy is planning to exit from its 50% owned joint venture business Kenya Petroleum Refineries (KPRL), which operates the oil refinery in Mombasa, Kenya.
Essar Energy, through its subsidiary Essar Energy Overseas, has exercised a put option under the shareholders’ agreement to sell its stake in KPRL to the Government of Kenya, which holds the remaining 50% interest in the Mombasa refinery.
This decision by Essar Energy to exit the JV follows a series of studies by international consultants into the technical, economic and funding elements of an upgrade of the Mombasa refinery.
Essar Energy said it believes that the upgrade is not economically viable in the current refining environment.
Essar Energy acquired its 50% stake in KPRL in July 2009 for $7m from BP, Chevron and Royal Dutch Shell.
As per 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 would acquire the company’s 50% stake of KPRL for $5m.
