By Samuel Kamndaya & Agencies

Indian billionaire Mukesh Ambani, who is Asia’s richest man, has joined the race to buy the assets of the British Petroleum (BP) Company in Tanzania and three other African countries.

International industry sources said yesterday that Mr Ambani’s two firms, Reliance and Essar, had offered between $400 million (about Sh560 billion) and $500 million (Sh700 billion) for each of the BP Africa’s assets in Tanzania, Malawi, Botswana, Namibia, and Zambia. 

Should the bid succeed, it will consolidate the influence of the world’s fourth richest man in the local fuel market since Mr Ambani already does business in the country through Gulf Africa Petroleum Corp (Gapco). The acquisitions are bound to have far-reaching regional ramifications since Gapco also does business in Kenya and Uganda.

About half a dozen firms, including Libya’s National Oil Corporation, have also expressed interest in buying the BP assets in the five countries.

 Kenya’s Kenol Kobil had also said it was keen to acquire the assets after BP announced early this year that it was quitting some of its African operations to concentrate only on a handful of markets.

The Tanzanian Government, which holds a 50 per cent stake in BP Tanzania, had also declared that it wished to acquire the oil giant’s business in the country. 

There have also been reports that Tanzania was considering teaming up with Zambia and Malawi in a joint acquisition, since the business would be a strategic investment to ensure reliable stocks of fuel in the three countries.

Yesterday, Energy and Minerals minister William Ngeleja said though the government had expressed interest in acquiring the business, BP Africa had not responded. He said that as a key shareholder, the government would have to be consulted before the BP assets in Tanzania are sold.

“We are still waiting for their offer. Despite having said they want to sell their shares, they have not yet communicated with us officially,” Mr Ngeleja told The Citizen by phone from his Sengerema constituency, in Mwanza Region.

Last March, Mr Ngeleja announced that buying the BP Africa stake in BP Tanzania would be one of the government’s business ventures.

He also said that even if BP found another strategic investor, the transaction would not go on without the government’s approval.

“No new investor will come aboard without our approval. This is according to the partnership deal that we have sealed,” he said.

Although the BP Africa asset sale was announced before the company’s oil leak disaster in the Gulf of Mexico that has cost it billions of dollars, there were no reports of the proceeds being used to help pay damages arising from the debacle in the United States.

The company recently announced sale of $30 billion worth of exploration and production assets to pay for the damages. 

BP’s Deepwater Horizon rig in the Gulf of Mexico exploded in April, resulting in a massive oil spill, with BP saying in its report to the regulators that spill-related payouts could easily exceed $32 billion.

Mr Ambani, whose personal wealth was stated as $29 billion, as of July, acquired the Gapco business in Tanzania through Essar Oil in 2007.

 The 53-year-old Indian also has a 48 per cent stake in Reliance Industries - the largest private sector enterprise in India.

The assets BP is selling include retail outlets, terminals and aviation fuel stations.

According to industry sources, Reliance may be looking at supplying gas oil, gasoline and jet fuel to the East African markets from its twin refineries at Jamnagar in Gujarat. Currently, the company is the supplier of oil to Gapco, which also owns retail outlets in Uganda and Kenya.

Last year, Essar Oil acquired a 50 per cent stake in the Kenya Petroleum Refinery in Mombasa. 

Sectoral experts say the acquisition of the BP assets would give a company a ready market for auto and aviation fuel with a scope for further expansion into neighbouring high growth countries. Besides selling fuel, lubricants and liquefied petroleum gas (LPG), BP is the largest aviation fuel supplier in Tanzania, with about 70 per cent market share. 

BP Tanzania has for a long time held a 35 per cent market share in both the retail and service stations.

 In Zanzibar, it has been controlling the aviation fuel market by about 100 per cent.

BP owns half of BP Malawi, which operates 46 service stations. It is also the sole supplier of aviation fuels and aviation lubricants to the country’s two international airports at Lilongwe and Blantyre.

 

In Zambia, BP owns 53 out of the 196 pumps and the largest number of fuel storage and handling depots in the country. 

BP Namibia's network includes 29 service stations, five depots and aviation services.