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Kenya: Libyan Investors to Buy Oil Refinery
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The Nation (Nairobi)
30 June 2008
Posted to the web 30 June 2008
Lucas Barasa
Nairobi
As the controversial sale of the Grand Regency Hotel rages, it has emerged that the strategic Kenya Pipeline Refineries Limited is on the verge of being sold to Libyan company, Tamoil.
This follows a deal reached when a delegation led by President Kibaki visited Libya last year.
And Safina party leader Paul Muite Sunday opposed the sale, saying that the Libyan investors wanted to buy the crucial public asset at a throw-away price.
Mr Muite said that an Indian firm, which had won a tender to buy 50 per cent of shares being off-loaded by private firms, had been rejected in favour of the Libyan investors.
"The Indians had offered 10 million US dollars to buy the Shell, Chevron and BP shares. They were further to give 15 million dollars for the upgrading of the refinery. However, when the deal was about to be concluded, somebody intervened and said the shares should be sold to Libyans. The procurement procedure has been violated and another corrupt deal is in offing," Mr Muite told the Nation in his Nairobi office.
The former Kabete MP said that the Libyan investors had kept off the tendering process because "that is not the way they do business".
Mr Muite told President Kibaki to clear the air over the trip to Libya, saying that the assets being sold to the oil-rich country belonged to the public.
Trade pact
Months to last year's General Election, Kenya signed an exclusive trade pact with Libya, granting Tripoli a "most favoured nation" status - giving Libyan companies a head start over other investors when competing for lucrative Government contracts.
Titled: "Agreement on Promotion Guarantee and Protection on Investment", the document was signed by Dr Mukhisa Kituyi, the then minister for Trade, and Dr Ali Elisaue, the secretary-general of Libya's General People's Committee for the Economy and Investment.
During discussions with the Kibaki mission, the Libyans expressed interest in six projects.
First was the purchase of the Grand Regency Hotel by the state-owned Libya African Investment Portfolio (LAP).
In the information and communications technology (ICT) sector, the Libyans wanted to take up a 20 per cent stake in The East African Marine Cable System (Teams).
Under the project, a fibre-optic cable will be built between Mombasa and Fujaira in the United Arab Emirates at an estimated cost of $100 million. The current partners are the Kenya Government and Etisalat of the UAE.
Libya's state-owned company Tamoil also wants to participate as a major equity partner in Kenya Pipeline Company's Eldoret-Kampala pipeline, in which its equity is at least 51 per cent.
Not disposing
On Sunday, Energy assistant minister Charles Keter confirmed that private companies wanted to off-load their shares in the refinery. However, he said that the Government was not disposing of its 50 per cent stake.
Other sources said yesterday that Essar Energy Overseas of India was being forced to surrender half of the 50 per cent stake it had won to a Libyan firm whose bid came third.
The Libyan firm has also been holding discussions with the Kenya Petroleum Refineries Limited on its participation in the proposed LPG handling and storage facility in Mombasa.
It has expressed a desire to hold 51 per cent of equity in the proposed joint venture.
The current shareholders of KPRL have since given a commitment to sell their entire equity to new shareholders.
According to the shareholders' agreement, the Government has the right of pre-emption if the industry shareholders decide to sell their shares.
The refinery in Changamwe, Mombasa, has a capacity of around 72,000 barrels. The intended modernisation programme is aimed at raising the production of liquefied petroleum gas from 30,000 tonnes to 120,000 tonnes per year.
The Indians are said to have pledged to use over $400 million (about Sh22 billion) in both equity and loans to upgrade the refinery, a process that would eventually dilute the Government's 50 per cent stake.
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Libya, whose president, Muammar Gaddafi, has been advocating for the formation of a United States of Africa, has been using its diplomatic, political and economic muscle to penetrate and invest in various countries in the region.
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