Essar Stake in KPRL to be Finalised by End of Month (Update)
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Thursday, 09 April 2009 |
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Essar Oil Ltd, is close to buying a 50% stake in Kenya Petroleum
Refineries Ltd, or KPRL, for about $450 million (Rs2,250 crore) after
the Kenyan government dropped objections that had delayed the deal for
at least one-and-a-half years, an Essar Group executive said.
An agreement is expected to be signed by the end of this month, and Essar Oil expects to finance the acquisition through a combination of internal accruals and debt, said the executive, who didn’t want to be identified because the transaction is yet to be concluded.
Essar Oil’s chief executive officer Naresh Nayyar said that his company was still in talks with the Kenyan government. “I cannot share the information at this point of time,” Nayyar said, adding that an agreement had still not been firmed up.The Mumbai-based company would be acquiring the 50% stake from existing shareholders Shell Petroleum Co. Ltd, British Petroleum Africa Ltd and Chevron Global Energy Inc. The remaining half of KPRL is controlled by the Kenyan government.
“Though some technical problems still remain on the acquisition, the Kenyan government has largely cleared the deal and it should be closed by month end,” the Essar Group executive said.“The latest discussions are on the management control and is expected to (be) sorted out shortly,” he added.
If the deal finally happens, Essar’s first international purchase in the refining sector will give it a toehold in the African refining market and a refining capacity of 1 million barrels per day. KPRL’s unit in Mombasa is the only refining facility in east Africa, with a 4 million tonne (mt) annual capacity.
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