India-focused energy firm Essar is to pull out of its Kenyan refinery business.
The company, which also operates the UK’s second-larges fuel refinery, said it had agreed to sell its stake in the project to the Kenyan Government at a $2million loss.
The move comes following a review of the refinery at Mombasa, which concluded an upgrade of the facility was not currently economically viable.
The refinery, which was designed for a capacity of 4million tonnes per year, only managed to process 1.6milion. It would have needed up to $450million of investment to upgrade the refinery.
“Essar Energy will continue to work closely with the Government of Kenya to ensure a smooth transition of ownership,” said the company in a statement.
Essar took a 50% stake in the refinery in 2009, paying $7million for the share from BP, Chevron and Shell.