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Sasol responds to Budget 2006

16 February 2006

In response to the 2006 Budget released in Parliament today, Sasol pointed out that it did not have sight of the proposals relating to the appointment of a task force to investigate the possibility of windfall gains being shared with the public. It was therefore still studying the proposals and would be engaging with Government to obtain further information on the proposed investigation.

Sasol will cooperate with the proposed task force, and is confident that once all of the pertinent facts have been scrutinised, an outcome will result in which the interests of all stakeholders would be addressed.
Referring to the global commodity price boom, that has resulted in significantly higher oil, gold and platinum prices, Sasol acknowledges that local motorists, like their international counterparts, unfortunately are incurring additional expense for fuel. However, as the Minister of Finance pointed out in his speech, the price of petrol is determined by the Department of Minerals and Energy through a regulated mechanism.
The Minister's statement furthermore unfortunately focuses on the domestic synthetic fuels industry only. Sasol is the major contributor to this industry and the single biggest industrial investor in South Africa. The company is concerned that its ability to reinvest profits into its operations will be compromised if windfall taxes are imposed. Selecting local companies for possible legislative intervention will be severely detrimental to the ability of South African companies to compete with the much larger oil supermajors.
While Sasol acknowledges that the high oil prices resulted in higher profits in 2005 than in its 2004 financial year, the significant strengthening of the rand offset the benefit of higher oil prices and resulted in Sasol's profit for 2005 being more or less the same as achieved as far back as 2002. The notion of “windfall gains” does not take account of this phenomenon.
Regarding the Minister's reference to tariff protection, Sasol responded that it had, in common with other industries such as the motor industry, received tariff protection. In terms of the then prevailing agreements, Sasol had repaid all of its obligations to Government, and was confident that it had fully complied with all of the conditions of the tariff protection dispensation. Similarly, in line with other industries such as steel and telecommunications, Sasol was indeed established by Government. Upon privatisation, Government was handsomely rewarded for its investment, and is still a major shareholder (and recipient of dividends) through the IDC and the PIC. 
Andre Botha
Group Public Affairs Manager
(011) 441 3218
082 453 4961
Johann van Rheede
Media Manager
Sasol Limited
Direct telephone +27 11 441 3295
Mobile +27 11 (0) 82 329 0186
Direct facsimile +27 11 441 3236

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