Essar Energy, which is listed on the London Stock Exchange, intends to exit its 50 per cent stake in Kenya Petroleum Refineries Ltd (KPRL) by selling it to the Government of Kenya for $5 million.

The company had acquired the stake in KPRL in July 2009 for $7 million from BP, Chevron and Royal Dutch Shell, global energy giants.

The company, through its subsidiary Essar Energy Overseas Ltd, exercised the put option to sell its stake in KPRL. Essar Energy Overseas Ltd holds the 50 per cent stake in KPRL, while the remaining is held by the Government of Kenya.

KPRL operates an oil refinery in Mombasa, Kenya, which has 80,000 barrels a day of refining capacity.

In a statement, the company said that it is selling its stake, as the refinery upgradation is not viable in the current refining environment.

The decision was based on studies by international consultants, which examined the technical and economic aspects of the refinery upgrade.

Under the terms of the shareholders agreement established with the Government of Kenya at the time of the acquisition, Essar Energy was given the right, under certain conditions, to exercise a put option.

rahul.wadke@thehindu.co.in