The co-owner of Kenya Petroleum Refineries Ltd, Essar Energy Ltd, announced the sale of its 50% stakeholding in the country's only oil refinery to the government after reviews indicated that an upgrade would not be economically viable.
In an emailed statement, the India-based firm said that it would be exercising a USD5 million option to sell its shareholdings under the current joint-venture shareholder's agreement. This would leave the government with full ownership.
KPRL announced last April it would be considering the raising of USD1 billion in debt and equity for a planned upgrade of the facility. The plan is to increase capacity to 4 million metric tons per year by 2019 from its current 1.6 million tons as well as improve its efficiency.
According to a statement from the company, "Essar Energy believes that the upgrade is not economically viable in the current refining environment." The company is severely hampered by outdated equipment and a dearth of investments in maintenance. This would result an increased cost of 6% to refine the fuel under existing KPRL facilities compared to import it.
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