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Libya beats out India,COs Essar in struggle for Kenya refinery.

Summary: The government has finally given Libya Oil Holdings Ltd the go-ahead to purchase 50 per cent shares of Kenya Petroleum Refineries Ltd Co introducing a new twist to a battle for control of the refinery that has pitted the Libyans against Indian conglomerate Essar Group.

The government has finally given Libya Oil Holdings Ltd the go-ahead to purchase 50 per cent shares of Kenya Petroleum Refineries Ltd - introducing a new twist to a battle for control of the refinery that has pitted the Libyans against Indian conglomerate Essar Group. The Libyans will be purchasing shares hitherto owned by three European multinationals - Shell International Petroleum Ltd, BP Africa Ltd and Chevron Global Energy Inc. On paper, the arrangement is that the Indians will be accommodated by being offered shares in the company once the Libyans seal the deal with the three multinationals. As a matter of fact, the government has held discussions with both the Libyans and the Indians and agreed on an arrangement where the Indians will be accommodated. But whichever way one looks at it, the Indians have been snookered over the deal. Once the Libyans sign a deal with the European multinationals, the Indians will have to rely on the benevolence of the former to accommodate them. <p>Sources told The EastAfrican that the Treasury was last week trying to persuade the parties to sign a written document committing them to agree to the accommodation arrangement. In a sense, the deal has once again exposed the growing clout and influence the Libyans are acquiring within the corridors of power in Kenya. The transaction has been conducted against the background of intense lobbying by influential agents representing the two investors.

At one point, it appeared that the Indians would clinch the deal, especially after they emerged tops in the tender floated by Shell, Chevron and BP paving the way for the signing of a sale and purchase agreement between the parties. As the Indians waited for the government to waive its pre-emption rights and consummate the deal with the multinationals, the government asked for time to seek an alternative offer from the Libyans.

But on January 29, the Libyans wrote to the Ministry of Energy, declining to respond to the offer on the grounds that the offer the ministry was giving them was a breach of a memorandum of understating signed between the governments of Kenya and Libya in June last year. It is then that intense lobbying by the Libyans and their well-connected agents started. The multinationals found themselves unable to consummate the deal with Essar group. On February 2, they wrote a letter to Finance Minister Amos Kimunya, protesting the delay in getting the waiver of pre-emption rights by the government. <p>"We find difficult to understand the reason for the government needing a further extension of time. We will reluctantly agree to a further extension only until March 14," said Martin Dickinson on behalf of the multinationals. At that stage, the excuse by the government was that they needed to do a due diligence on the Essar Group.

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Publication:UMCI News (Potomac Falls, VA)
Date:Jun 30, 2008
Words:526
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