Chevron SA attracts new suitors as heads roll at state fuel body
Now Sasol claims to be eyeing US petrol giant’s SA forecourts
THE acting CEO of the Strategic Fuel Fund, Sibusiso Gamede, and its chairman have resigned after the Department of Energy reacted swiftly to the fund’s shock bid for a 75% stake in Chevron South Africa.
This comes just weeks after another controversial move when it sold South Africa’s oil reserves of 10 million barrels at the below-market price of $28 a barrel.
When the bid was made public this week, Energy Minister Tina JoematPettersson responded to being blindsided by setting up an official probe into the actions of the fund’s executive. On Friday, the board of directors of the Central Energy Fund, of which the Strategic Fuel Fund and PetroSA form part, decided that such an offer did not comply with governance requirements.
In a statement on Friday afternoon, the Central Energy Fund, which reports to the Department of Energy, said the board had accepted the immediate resignation of Strategic Fuel Fund chairman Riaz Jawoodien and Gamede. The Central Energy Fund said it had “resolved to urgently address the gaps in governance compliance at SFF and across the CEF group of companies”.
The Central Energy Fund also apologised to Chevron South Africa for
The Central Energy Fund has resolved to urgently address the gaps in governance compliance
any impact this may have on the company. “The group further regrets the perceived misalignment with the minister of energy and the Department of Energy,” the statement read.
The Strategic Fuel Fund had made a bid to acquire the 75% of Chevron South Africa that the US parent company is selling. The National Treasury last year blocked an attempted acquisition by PetroSA of Petronas’s stake in Engen for R18-billion.
The remaining 25% of Chevron South Africa includes a 23% stake held by a consortium including the SA National Taxi Council, African Legend, Lithemba and Ditikeni, and an employee trust holds the remaining 2%.
Santaco spokesman Thabisho Molelekwa said the taxi alliance had been concerned about the Strategic Fuel Fund’s interest because it was a parastatal. He said parties from the consortium would meet soon to consider increasing its stake in Chevron South Africa as well as ways it could influence decisions around preferred bidders for the majority stake.
Chevron announced its plan to leave South Africa six months ago.
Oil companies in South Africa face uncertainty over a looming carbon tax and future clean-fuel standards. Upgrades to Chevron’s Cape Town refinery could cost R15-billion. Chevron has been pulling out of noncore regions such as South Africa, where volumes are small and crude oil needs to be imported.
On Thursday, Sasol said it was also considering making an offer for Chevron’s assets — valued at around R15-billion — which include roughly 850 Caltex retail fuel stations, the refinery in Cape Town that churns out 110 000 barrels a day and a Durbanbased lubricants business.
Analysts speculate Sasol’s main motivations for making its consideration public would be to mollify critics of its massive capital expenditure outside South Africa and, through such a deal, get access to Caltex’s forecourt footprint. Forecourt licences are difficult to come by. Such a deal could give Sasol, which operates mostly in the northern half of the country with around 250 stations, Caltex’s complementary footprint in the south.
While analysts believe that such a deal could encounter some competition issues, a partial sale to satisfy authorities would probably not imperil such a strategy.
The forecourt network might be highly cash-generative and allow Sasol to recoup a R15-billion outlay fairly quickly, but analysts worry that shareholders would balk at another capital-raising exercise in the wake of several splashes in the US that have stretched the group’s balance sheet.
Shareholder reception to such a deal — if it is more than an effort to placate critics of its non-South Africa strategy — might depend strongly on the form of the financing opted for.