Indian energy firm buys 50 % shares in Kenyan refinery

Indian firm, Essar Energy Overseas, has complete d the acquisition of 50 % stake at the Kenya Petroleum Refineries Limited (KPRL).
This was after private companies, Shell BP and Chevron, sold their stake in the refinery and the government declined to take its pre-emptive rights.

Essar Group Chief Executive Prashat Ruia said the group intended to upgrade the plant, located in the coastal city of Mombasa, by adding secondary units t o the project at a cost of about Sh 30 bn ($ 1 = 77 Kenya Shillings).
"We will be working very closely with the government in the next few months to put a plan of how exactly we will deliver on the job," Mr Ruia said in Nairobi. Ruia said the group would further invest in a distribution and retail business t o bring products closer to consumers.

Kenya's Finance Minister Uhuru Kenyatta said the transaction marked the end of negotiations between the two parties over the last several months, which had resulted in the signing of a Share Sale and Purchase Agreement between them. Kenyatta noted that in support of this process, the government had waived its pre-emptive rights in KPRL.
"Indeed the government had the option to purchase the shares held by the independent oil companies but chose not to do so, in order to maintain our shareholding at the current level of 50 %," he said, revealing that the government had received a consideration of Sh 152.9 mm from Essar. "This amount of money will be added to Sh1.6 bn that the government has so far set aside as equity to fund the modernisation of the refinery," he added.

Speaking while witnessing the signing ceremony, Prime Minister Raila Odinga observed that the new partnership would inject new impetus at the refineries which required expansion and installation of state-of-the-art equipment to cope with modern trends and demands in the energy sector.
"We invite the new investor to partner with the government in running the refinery to reap the opportunities in the market so that quality products are produced in large scale to meet the market demands," Odinga said. The premier noted that the energy sector faced a myriad of challenges but expressed optimism the venture was likely to inculcate sound technical management skills at the facility.

Meanwhile, the government has finally admitted that it has shelved the idea of introducing price controls in the oil industry. Permanent Secretary in the Ministry of Energy Patrick Nyoike said the idea was mooted to encourage competition in the sector, which has now happened.
"Decontrolling was meant to induce competition and as you can see now, there is competition. Prior to 1994, I used to be the price controller and it used to waste a lot of time because we as a country had no control over external factors," Nyoike said.

He said the decision was finally reached after recommendations of the National Economic and Social Council (NESC). Nyoike noted that the introduction of price controls would increase the burden o n the exchequer, adding "and the situation remains that way until further notice."
The government had threatened to introduce price controls after motorists complained that the oil companies were not passing the benefits on to consumers.