Reliance Industries, along with its minority partner Fortune Oil Corporation, have agreed to sell their entire stake in Mauritius-based Gulf Africa Petroleum Corporation (GAPCO) with fuel retail operations in East Africa to French energy giant Total S.A. for an undisclosed sum to focus on the domestic market.
Reliance Exploration & Production DMCC (REPDMCC), an indirect wholly-owned subsidiary of RIL and Total, have executed agreements on May 30, 2016 for the sale of the entire 76 per cent interest held by REPDMCC in GAPCO, said a company statement, adding that the proposed transaction is subject to regulatory approvals and other closing conditions that are customary for similar transactions.
According to Total president, Marketing & Services, Momar Nguer, the acquisition is in line with Total’s growth strategy for the distribution of petroleum products and services in Africa, which aims at expanding in fast-growing regions while maintaining high profitability. “These assets, which complement our activities in East Africa, will help us fully leverage synergies of size and build the most competitive integrated regional supply, logistics and marketing base,” said Mr. Nguer.
RIL in 2007 acquired 76% stake in loss-making GAPCO, a holding company with operating subsidiaries in Tanzania, Kenya and Uganda, which are primarily engaged in petroleum product import and trading, storage, distribution, marketing, supply and transportation of oil products in East Africa.
Since then, RIL has significantly grown GAPCO to make it one of the leading petroleum marketing companies in East Africa, which now operates 108 retail outlets. However, when RIL had acquired it in 2007, the company had more than 250 outlets covering retail and industrial segments.
RIL has re-started 1,000 of the 1,400 closed petroleum retail outlets in the domestic market and plans to open the remaining by the end of this year, said a company official.
“REPDMCC’s agreement to sell its interest in GAPCO is part of a joint transaction, wherein both REPDMCC and the minority shareholder have agreed to sell their entire respective holdings in GAPCO for cash,” said the company statement, adding that the net proceeds for the sale will be finalised on completion of the transaction, which is expected to be done within the coming months.
Total is the leading petroleum product retailer in Africa, with a network of more than 4,000 service stations. The company aims to grow its market share from 17 per cent in 2015 to more than 20 per cent. RIL shares on BSE closed down 1 per cent at Rs. 958.95 in a flat Mumbai market on Tuesday.
