The Ruias-owned Essar Oil on Friday completed the acquisition of a 50 per cent stake in a 4-million-tonne oil refinery in Mombasa, Kenya.
The company bought out the stake of western energy majors including Royal Dutch Shell, British Petroleum and Chevron in Kenya Petroleum Refineries Ltd (KPRL), Prashant Ruia Essar Group chief executive said in a conference call from Nairobi.
The company, however, did not give the acquisition price.
Ruia said an investment of around $350-450 million would be made in the capacity upgradation of the refinery.
He said the acquisition would be followed up with fuel retailing operations in Kenya. “It is early days but we have a plan. We may either set up green field pumps or acquire some of the existing ones,” he said.
“We will follow our model in India which is that of a refinery with retail and market distribution. We have 1,500 petrol pumps in India which we operate on a franchise basis.”
The acquisition has been done through Essar Energy Overseas Ltd and the Government of Kenya, which holds the remaining 50 per cent stake, is its joint venture partner in the refinery.
Essar Oil is currently operating a 10.5 million tonnes per annum (mtpa) refinery at 133 per cent capacity at Vadinar in Gujarat. This refinery capacity is being extended to 16 mtpa by 2010 and 34 mtpa by 2011.
The Mombasa refinery is the only refinery in Eastern Africa. It produces LPG, petrol, diesel, kerosene and fuel oil. The products are sold in 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.