July 23, 2008 / 5:13 PM / in 10 years

UPDATE 1-Kenya wants Libya to share Essar refinery stake

LONDON, July 23 (Reuters) - Kenya wants a private sector stake in an oil refinery split between India’s Essar Oil ESRO.BO and Libya, the country’s energy minister said on Wednesday.

Essar Oil Ltd, India’s second largest private oil firm, earlier this year said it had agreed to buy a 50-percent stake in Kenya Petroleum from Shell (RDSa.L), BP (BP.L) and Chevron (CVX.N).

“Libya also expressed interest in purchasing 50 percent,” Kiraitu Murungi told Reuters on the sidelines of a business forum in London.

“Libya did not participate in the competitive process (for the refinery) but they have offered very attractive terms, not to the previous shareholders but to the government,” Murungi said.

“The government has entered into discussions to see whether Essar and Libya can split the 50 percent stake.”

The Kenyan government holds the other 50 percent stake.

The government has to give the final approval for the sale to go through, but Murungi said it had not yet done so as it was still weighing up the Libyan offer, from government-owned Libya Oil.

“We are not saying no to Essar,” Murungi said.

“The government has looked at this deal in the best interest of the Kenyan people, not in the best interests of Essar or the Libyan people.”

He said talks to resolve the sale had been delayed after finance minister Amos Kimunya stepped aside for an investigation of his role in the sale of a luxury hotel.

Murungi said he hoped the deal would be concluded soon to pave the way for more foreign investment in the energy sector.

Reporting by Sebastian Tong

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