Essar Energy to exit Kenya Refinery venture

Essar Energy announced that it intends to exit from its 50 per cent owned joint venture business Kenya Petroleum Refineries Ltd (KPRL), which operates theoil refinery in Mombasa, Kenya. Essar Energy, through its subsidiary Essar Energy Overseas Ltd., has exercised a put option under the shareholders’ agreement to sell its stake in KPRL to the Government of Kenya, which owns the remaining 50 per cent interest in the Mombasa refinery.“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, Essar Energy believes that the upgrade is not economically viable in the current refining environment,” the company said in a statement. It added it would work closely with the Kenyan government to ensure a smooth transition of ownership. Essar Energy acquired its 50 per cent stake in KPRL in July 2009 for a total consideration of $ 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 per cent share of KPRLfor $ 5 million.Essar Energy, through its subsidiaries, owns one of India’s largest private power producers with 3,910MW of installed capacity and projects under construction to expand its capacity to 6,700MW.