Parties to the Uhambo transaction have submitted their expert reports and witness statements to the Competition Tribunal, for the Tribunal's hearings regarding the joint venture starting on 3 October 2005.
The Uhambo joint venture will merge the liquid fuels activities of Petronas and Sasol Ltd - Engen and Sasol Oil. Malaysia-based Petronas and Sasol Ltd each will hold 37.5% of the equity, while Black Economic Empowerment (BEE) partners, Tshwarisano and Worldwide African Investment Holdings, will hold a combined 25% of the equity.
The transaction represents the largest BEE deal in the liquid fuels sector and will make Uhambo's shareholding compliant with the Charter in an industry with significant start-up costs and other barriers to entry.
The documents submitted address a broad range of issues, but with specific focus on the questions of foreclosure and efficiency gains.
Uhambo believes its evidence will demonstrate that the joint venture should foster no competition concerns.
With regard foreclosure (the allegation that Uhambo would be able to, or have incentive to, restrict inland supplies to the large multinational oil companies and their outlets), the analysis shows that Uhambo would not be able to do so, nor would it be economically viable for it to restrict competitors' access to fuel products. The supply condition recommended by the Competition Commission also addresses any remaining concerns that the multinational oil companies may have and provides them sufficient protection.
The Commission found no objections to the joint venture at the time of its referral on public interest grounds, which include a joint venture's effect on employment.
Uhambo and its witnesses will stress that the joint venture will be pro-competitive and enhance efficiencies, and will in all likelihood improve pricing and incentives to invest in the sector.
The joint venture will create operational efficiencies and lead to savings and better co-ordination of activities within the integrated entity. Certain of these efficiencies will be passed on to South African motorists.
The synergies and efficiency gains explored by the expert witnesses are specific to the joint venture and are not simply transferred gains. The restrictions on sharing of information and contractual obligations would prevent such gains in the normal course of business; the joint venture must be the vehicle to achieve such savings.
The Tribunal will consider the joint venture from 3 October to 25 October.
Prepared by: Beachhead Media & Investor Relations
Patrick Lawlor 011 214 2410 / 082 459 6709
Jennifer Cohen 011 214 2401 / 082 468 6469
On behalf of: Uhambo
Information on Petronas
PETRONAS, short for Petroliam Nasional Berhad, is Malaysia's national petroleum corporation established on 17 August 1974. Wholly-owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources.
Since its incorporation PETRONAS has grown to be an integrated international oil and gas company with business interests in 35 countries. As at end of March 2004, the PETRONAS Group comprised 93 wholly-owned subsidiaries, 19 partly-owned outfits and 55 associated companies.
The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment
For the financial year ended March 31 2004, Petronas recorded revenue of US$25.7-billion and an after-tax profit of US$6.2-billion. Almost 80% of the company's revenue was derived from its export and international operations. Internet address: www.petronas.com.my
Information on Sasol
Sasol, with a market capitalisation of approximately USD20billion, is an integrated oil and gas group with substantial chemical interests. Based in South Africa and operating in 15 other countries throughout the world, Sasol is the leading provider of liquid fuels in South Africa and a major international producer of chemicals, using a world leading technology for the commercial production of synthetic fuels and chemicals from low- grade coal. In the future Sasol expects to apply this technology to convert natural gas to diesel and chemicals. Sasol manufactures over 200 fuel and chemical products that are sold in more than 90 countries and also operates coal mines to provide feedstock for synthetic fuels and chemical plants. The company also manufactures and markets synthesis gas and operates the only inland crude oil refinery in South Africa. Internet address: www.sasol.com
Information on Worldwide African Investments
Worldwide is a black-owned and managed investment holding company founded in 1994. Over the last decade, Worldwide has undertaken substantial investments in several economic sectors, most notably in the oil, financial services, telecommunications and information technology industries. The company's involvement in the oil industry pre-dated the South African Liquid Fuels Charter of 2000 when it invested in Afric Oil in 1995 and followed with the acquisition of a 51% stake in Zenex in 1997. Worldwide's shareholding in Engen is the company's biggest investment. In February 2004, the Worldwide board of directors decided the company should continue to build on its experience in the oil industry and to focus on the energy sector in its broader sense.
Information on Tshwarisano
Dr Penuell Maduna, the former South African cabinet minister, is leading a group of BEE investors for Tshwarisano. He is responsible for facilitating and structuring a broad-based and representative BEE consortium associated with the Sasol LFB that will participate in the joint venture through, Tshwarisano. While it is expected that the Maduna group will take an important position in this transaction, Tshwarisano will also involve previous shareholders of Exel who currently hold shares in Sasol Oil, as well as Batho Trust (a broad-based empowerment trust) and other broad-based BEE interests, including women's groups. The former Exel shareholders include a trust with rural women as beneficiaries, a pension and provident fund with members who are pump attendants, service station owners and an eminent women's group.
Information on Engen
Engen's core business entails refining crude oil, marketing and retailing primary refined petroleum products and providing consumer convenience services through its retail network. In South Africa Engen has in the region of 1 250 service stations and in the region of 450 Quickshop convenience stores. Engen owns and manages a 125 000 barrel a day (bbl/d) crude oil refinery and a state-of-the-art lubricants blending plant at Durban. Engen is represented in 13 countries outside South Africa: Namibia, Botswana, Swaziland, Lesotho, Zimbabwe, Zambia, Kenya, Mozambique, Uganda, Tanzania, Burundi, the Democratic Republic of the Congo (DRC) and Ghana. Engen's turnover for the year ended March 31 2004 was R18 178-million and operating profit for this period was R752-million. Internet address: www.engen.co.za
Information on Sasol LFB
Sasol LFB includes all of Sasol's assets in the liquid fuels business, encapsulating the entire value chain from crude oil procurement for Sasol's 63.6% stake in the Natref refinery to receiving blending components from the Sasol Synfuels refinery at Secunda (potentially to reduce, as a result of this transaction, to 50%). All of Sasol's assets in distribution and marketing, as well as assets in the marketing and storage of fuel oil, are also included. Sasol LFB's turnover for the year ended June 30 2004 was R18 851-million and operating profit for this period was R1 429-million.