Libya oil Holdings Limited has officially given the green light by the country’s treasury to buy 50 per cent of the Kenya Petroleum oil Refineries from three oil majors, Chevron, Shell and British Petroleum, BP, at a price of $ 10 million, and to appoint two directors to represent it on the board of the company. This was a twist in the bidding conflict between the Libyan company and Indian conglomerate, the Essar Group Limited.
Last year. Chevron, shell and BP signed a sale and purchase agreement expressing the intention to sell their stake to the Indians at $ 10 million, but the government moved quickly and vetoed the deal by exercising its pre-emption rights over the shares. Having vetoed the deal between the Indians and the multinationals, the stage was set for government takeover of the shares. Indeed, the procedure is that once a part-owner of a company exercises its pre-emption rights by restraining its partner from selling shares to a third party, that shareholder must itself buy the shares from the partner and if it so wishes pass the shares to any third party who comes up with a better offer.
By this, the government has literally forced the oil companies to transact business with the Libyans on the same terms of the sale and purchase agreement they had signed with Essar Group. Expectations were that the Libyans would offer a figure higher than the $ 10 million that had been offered by the Essar Group.
As Shell, Chevron and Bp started putting pressure on the government to pay for their shares, Amos Kimunya, finance minister, was spelling out the formula and procedure to be followed in the transactions. He directed that the government authorises the Libyans to acquire the full 50 per cent of the shares held by the companies and that once the three multinationals exit, the Libyans and the government start discussions to bring the Indians on board.