Sasol counters factual inaccuracies by the Democratic Alliance .........

Date

7 September, 2005

Sasol counters factual inaccuracies by the Democratic Alliance in its call for a proposed supertax petrol levy on Sasol.

Sasol today reacted with astonishment to the Democratic Alliance's comments in parliament about action steps to reduce the price of fuel. The DA's media statement contains a number of factual inaccuracies and incorrect assertions about Sasol and the broader oil industry. We would be most happy to engage with the DA in this regard.

Sasol is aware of the fact that oil prices are high and we empathise with motorists who have had to bear the brunt of recent fuel price hikes. The price of crude oil as an internationally traded commodity will always affect the price of petrol at the pump in South Africa, as more than 70% of the country's crude oil requirements are imported and refined locally. This means that less than 30% of fuel is manufactured locally from coal or gas.

International fuel prices are at a high point due to concern about oil reserves and a dearth of refining capacity, which has been compounded by a more active than usual hurricane season in the US.

Petrol prices in SA are regulated based on international price levels. However, compared to other countries such as Japan, Spain, France, Italy, Germany and the UK, South Africans are still paying significantly less per liter at the pump. At current rand value people in the UK are paying R11 + per litre and in Japan about R7.60 per litre.

If the DA's supertax proposal were to be accepted, this would inevitably have an impact on SA's perception as an investment destination. As Sasol is SA's single biggest tax payer and direct capital investor, the company is already ploughing back a significant part of its profits into the SA economy.

The tariff protection dispensation for synthetic fuels lapsed six years ago and has not been renewed. The payback provision referred to by the DA was not part of the tariff protection dispensation.

Sasol produces approximately 150 000 barrels per day of synthetic fuel from coal, which accounts for about 25% to 28% of the country's fuel needs. The bulk of this fuel, along with Sasol's 64% share in the Natref Refinery (which produces about 10% of SA's fuel needs) is sold to the multi-national oil companies operating in South Africa at negotiated prices. Sasol's current share of the retail fuel market is about 7%.

Sasol's strategic importance to South Africa can be defined in strong terms and any advantages drawn from previous dispensations have been repaid to the nation in manifold ways:

Sasol's total capital investment in SA was R24bn in the four years to last year. This represents almost 90% of SA's total foreign direct investment of R27bn over the same period.
Provides direct and indirect employment for about 170 000 people, about 2% of the formal employment sector
Contributes about R40 billion or 4% to national gross domestic product
Saves the country more than R29 billion a year in foreign exchange
Supplies about 40% of the country's liquid fuel requirements (28% from coal and 12% from crude oil)
Produces 18% of the country's saleable coal
Contributes 13% and 12% to the gross geographic products of the Free State and Mpumalanga provinces respectively
Contributes more than R6 billion annually to the Government of SA in taxes and levies
Commits about R100 million annually to social investment and university bursaries

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Sasol counters factual inaccuracies by the Democratic Alliance .........

Sasol counters factual inaccuracies by the Democratic Alliance .........