Sasol prepares for largest black economic empowerment deal to date

Oct 26, 2004 02:00 AM

Sasol, the South African energy and chemicals group, plans to line up investors by the year-end for one of the country's largest black economic empowerment (BEE) deals to date, valuing its liquid fuels business at R 15 bn ($ 2.4 bn).
Black investor groups would take a 25 % stake in the retail business created by the merger of Sasol's operation with that of Engen, the fuels business in which Malaysia's Petronas has 80 %.

Pieter Cox, Sasol's CEO, said the partners were building a "diverse" investor group to take the stake as required under the industry's BEE charter. This requires liquid fuels companies to raise the shareholding by "historically disadvantaged South Africans" to 25 % by 2010.
Mr Cox said the investors included women’s' groups and the South African automotive workers' union, a choice intended to help deliver growth to its domestic business. Sasol was this year allowed to enter the retail market for the first time, and has so far opened 135 of its own service stations to add to the much larger Engen network.

Sasol and Engen will each hold a 37.5 % stake in the fuels operations, and aim to roll out the pact with the BEE investors in the first half of next year. The joint venture's black partners will also include Worldwide African Investment Holdings, which owns 20 % of Engen, and former shareholders of Exel, a BEE liquid fuels company that merged with Sasol last year.
Mr Cox also said the company was on track to start production from its new gas-to-liquids plant in Qatar on schedule in 2006.

Sasol is acknowledged as the global industry leader in the technology used to create liquid fuels such as diesel from natural gas and coal. Its joint venture with ChevronTexaco of the US will be the largest test of the GTL process, with production scheduled to rise to 230,000 bpd of oil equivalent by 2010.
Mr Cox also expressed confidence about the outcome of plans to use its technology to produce liquid fuels from China's large coal reserves, after announcing a feasibility study with two Chinese partners.
"There's genuine intent. It's down to whether the system can deliver," he said, in reference to concerns about protecting Sasol's intellectual property.

Source: PIN
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