Ruias-owned Essar Oil today announced acquisition of 50 per cent stake in a 4 million tonnes oil refinery in Kenya.
The company acquired 50 per cent stake of western energy majors Shell BP and Chevron in Kenya Petroleum Refineries Ltd, Essar said in a press release.
The company, however, did not give the acquisition price. The acquisition was done through Essar Energy Overseas Ltd. The Government of Kenya holds the remaining 50 per cent stake in the company.
KPRL is a 4 million metric tonne (MMTPA) per annum refinery in Mombasa, Kenya.
"This acquisition marks Essar’s foray in overseas refining market and is a step towards realising its vision of a global refining capacity of 1 million barrels per day," the release said.
Essar Oil operates a 2,80,000 bpd refinery at Vadinar in Gujarat. This refinery capacity is being expanded to 3,20,000 bpd by 2010 and then to 7,00,000 bpd by 2011.
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Commenting on the acquisition, Essar Group Chairman Shashi Ruia said: "This is an excellent addition to our oil assets and fits well with the Group’s strategy of building and becoming a global oil and gas player. This will further enhance our presence in the growing African market."
The Mombasa refinery is the only refinery in Eastern Africa. It 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.
"With this acquisition, Essar expects to play a major and vital role in the African oil and gas markets," the release said.
KPRL's products are sold into the Kenyan market and exported to neighbouring countries, including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes per annum.
Essar operates a GSM telephony licence in Kenya under the brand 'yu'. It launched GSM service in October 2008 and is regarded as one of the most innovative and fast growing telecom operators in Kenya.
The company has about 4,00,000 subscribers on its network in Nairobi and Mombasa and it expects this number to grow significantly as it completes it roll-out across Kenya by the year-end.
Essar is building an East Africa telecom play and therefore would be looking at launching telecom operations into other East African countries.