Essar Energy Overseas Ltd, a subsidiary of Essar Oil, will take a 50 per cent stake in Kenya Petroleum Refineries Ltd, media reports from Nairobi quoted Murungi as saying.
The Kenyan government will retain the remaining 50 per cent stake in the 4-million-tonne a year refinery.
Essar, which was chosen over Libya's overseas oil refiner Tamoil SA for the stake, will upgrade the Kenya's only refinery at a cost of $400-450 million.
The Mumbai-based firm will acquire the stake from the existing shareholders -- Shell Petroleum Company Ltd, Chevron Global Energy Inc and BP Africa Ltd.
The Mombasa refinery is the only refinery in Eastern Africa. It currently produces LPG, gasoline, diesel, kerosene and fuel oil. The refinery is planned to be upgraded by adding secondary units at a project cost of $400-450 million.
KPRL's products are sold into the Kenyan market and exported to neighbouring countries, including Tanzania, Uganda, Burundi and Rwanda. Demand for petroleum products in these markets is estimated at 5 million tonnes per annum.