07 October 2013 – Essar Energy , the London Stock Exchange-listed India-focused energy company, has announced its decision to exit Kenya Petroleum Refineries Ltd, KPRL. The company believes the project is not economically viable. KPRL, owned 50 per cent by Essar, operates the oil refinery in Mombasa, Kenya.
Essar Energy had acquired a 50 per cent stake in KPRL in July 2009 for $7 million from BP, Chevron and Royal Dutch Shell. Under the terms of the shareholders’ agreement with the Government of Kenya, Essar Energy has the right to exercise a put option under which the Government of Kenya would buy Essar Energy’s 50 per cent share for $5 million.
Therefore, Essar would stand to lose $2 million, nearly 30 per cent of its original investment. 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.