Reliance Industries acquires majority stake in Gulf Africa Petroleum Corporation

Reliance Industries Ltd has announced that Reliance has acquired a Majority stake and Management control of Gulf Africa Petroleum Corporation (GAPCO), a Company which has a significant presence in East Africa in the petroleum downstream sector. The acquisition has been made through a wholly owned subsidiary, Reliance Industries Middle East, Dmcc (RIME), a Company registered in United Arab Emirates.

GAPCO, an entity based in East and Central Africa with headquarters in Mauritius, owns and operates large storage terminalling facilities and a retail distribution network in several countries - including Tanzania, Uganda, Kenya. It also owns and operates large storage terminals in Dar Es Salaam (Tanzania), Mombassa (Kenya), Kampala (Uganda) and has other well spread depots in Fast & Central Africa. It also operates more than 250 Outlets covering retail and industrial segments.

Reliance considers its acquisition of GAPCO as strategic in nature. The East African countries, where GAPCO operates, have demonstrated rapid economic growth and have progressive government policies in place. The demand for petroleum products in these countries is rising steadily and has minored the rapid GDP growth. Import of petroleum products in these countries is also expected to rise in the near future. Further, these markets are easily accessible from India and in that sense provide a strategic fit for exports from India.

Reliance owns and operates the world's largest greenfield refinery (660,000 barrels per day capacity) at Jamnagar on the west coast of India and is setting up another similar sized export-oriented refinery (580,000 barrels per day capacity) at the same location through Reliance Petroleum Ltd (RPL). Post commissioning of this refinery by December 2008, Jamnagar will become the Refining hub of the world, processing approximately 1.2 million barrels of crude oil per day. This will be the largest refining complex at any single location in the world. Reliance is India's largest exporter with its petroleum products being sold in over hundred countries covering Europe, Americas, Far East and Africa in developed and emerging economies across various continents and geographies.

Acquisition of GAPCO by Reliance is a strategic step towards achieving its global vision in the petroleum downstream sector by integrating the entire value chain consisting of Refining, Shipping, Trading, Terminalling and Marketing through retail and wholesale segments. Integration of this entire global value chain presents Reliance an extremely attractive potential upside to gain further prominence in the global petroleum downstream arena. This will help Reliance establish a natural marketing sink for its refinery products and capture value up to the last mile in the global petroleum value chain.

Over the years, Reliance has acquired significant expertise in the petroleum downstream sector in India and has successfully demonstrated its various value propositions like Quality & Quantity, Automation, Fleet Management program and highway Hospitality targeted across various consumer segments. Reliance expects to leverage on this expertise and contribute significantly to the petroleum downstream sector in East Africa and play key role in the economic growth of the region.

Source : Equity Bulls

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