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Our Bureau

Mumbai, June 3 Essar Oil said on Tuesday that the company is yet to hear from the Kenyan Government on the acquisition of the 50 per cent stake in Kenya Petroleum Refineries Ltd (KPRL).

In an e-mail response to Business Line, the spokesperson of the company said, “The issue is under discussion with the Kenyan Government and we have yet to hear from them on this issue.”

However, a news report published on Tuesday from Nairobi quoted a Government official saying that Essar has agreed to a proposal made by the Kenyan Government for the acquisition of 50 per cent stake in KPRL.

According to the report, the arrangement entails that first the Libya-based company Tamoil Africa Holdings will be sold the stake from three existing shareholders – Shell Petroleum, Beyond Petroleum and Chevron Petroleum – and then Tamoil in turn will part with half of it to Essar. However, what measures are taken to ensure that Tamoil does so is still not clear, it added.

Earlier, in January, Essar had said in a statement that it has entered into an agreement to acquire 50 per cent stake in KPRL through Essar Energy Overseas Ltd, a subsidiary of the company. The Government of Kenya holds the remaining 50 per cent of the 4 million MMTPA refinery situated in Mombasa.

The statement further said that Essar will acquire the stake from the existing shareholders — Shell Petroleum, Chevron and BR. Subject to certain conditions, the acquisition is expected to be completed in early 2008.

KPRL would be Essar’s first international acquisition in the refining sector and would enable the company achieve refining capacity of one million barrels per day. Currently, the Indian oil major has three exploration and production blocks in Madagascar and one in Nigeria.

The Mombasa refinery is the only refinery in Eastern Africa. It currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of $400-450 million.

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