NEW DELHI: The country's biggest private sector oil firm, Reliance Industries Ltd, has acquired a majority stake and management control of Gulf Africa Petroleum Corp (GAPCO) and could change the dynamics of petro-retailing in several east and central African countries.
Though RIL did not disclose the deal size, sources pegged it upwards of $350 million and said more money could be pumped into upgrading the target company's plants.
Reliance acquired 50% stake in GAPCO through its wholly-owned subsidiary, Reliance Industries Middle East, a company registered in the UAE.
The remaining equity is owned by Anglo-Dutch Shell, UK's BP and Chevron of US. The company is headquartered in Mauritius and owns and operates large storage terminals and a retail network in Tanzania, Uganda and Kenya. Besides, the company runs over 250 outlets catering to retail and industrial customers.
GAPCO's two brands, Gapoil and Gapco, have a 40% share of the local oil trade. Though a small player in Kenya with a market share of 1.85%, the company is a major player in Tanzania, Uganda and Sudan.
In Tanzania, Gapco has an estimated 35% of the market, which it got after acquiring Esso and Caltex. In Uganda, it has a 12% market share, acquired through the buyout of Esso assets.
In June, RIL CEO P M S Prasad had told TOI: "Operating a refinery or building a new refinery or upgrading an existing one is our biggest strength. There are takeover opportunities and we are interested...There are several offers...some for sale of part stake and some for outright sale."
The acquisition fits well into RIL's strategy to leverage its core competence of extremely low-cost refining for denting the lucrative markets in the West, particularly US and Europe.
The company has on a sustained basis beat the benchmark Singapore index by notching up around $12/barrel refining margin by using complex technology that helps it to produce high-grade products from heavy varieties of crude that are cheaper.
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