The India focused intergrated company, Essar Energy plc, has announced its intention to leave the 50 percent shareholdings in the Kenya Petroleum Refineries Ltd (KPRL) which operates the oil refinery in Mombasa.
The company intends to sale its shares to the Kenyan government which owns the other 50 percent of the Mombasa refinery, through its subsidiary, Essar Overseas Limited.
In a statement the company said: ‘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, the company believes that the upgrade is not economically viable in the current refining environment.’
It will however continue to work closely with the Government of Kenya to ensure a smooth transition of ownership.
Essar Energy acquired its 50 percent shareholding in KPRL in July 2009 from BP,Chevron and Royal Dutch and is worth $7 million. However, the government of Kenya will not buy it at that price as the two parties had signed a deal stating that the government would buy the company’s 50 percent share at $5 million.
With all the years that KPRL has received help from Essar we hope that this will not be the beginning of a fall, but it is highly unlikely as they have been working together for four years, which is quite enough to learn a few skills about how the other party works.