Engen in deal to speed up transformation in petroleum sector
TO ACCELERATE and further enable its transformation objectives, Engen’s management has concluded a tripartite agreement with Nedbank and PetroCONNECT.
Engen is an energy company with more than 1 280 service stations across southern Africa and Mauritius.
Engen Retail Transformation Manager Tebogo Matsi said in an interview this week this non-exclusive partnership intended to alleviate possible barriers to entry and widen avenues for potential entrants to access Engen service stations.
The objective of this agreement was to provide funding, training and mentorship in broad-based black economic empowerment (B-BBEE) transactions to ensure sustainability of this commercial environment.
“Engen will identify and select prospective beneficiaries in accordance with its recruitment process and qualifying criteria. Once identified and selected, the potential beneficiaries would be referred to PetroCONNECT and Nedbank.
“They would then obtain the prescribed consent from the prospective beneficiaries to disclose their information to Nedbank for the purpose of evaluation during the credit application process. The prospective beneficiaries would then be referred to Nedbank for funding,” Matsi said.
Nedbank and NedGroup Mogale ESD would then assess the viability of each prospective beneficiary proposed by Engen in accordance with its due diligence processes to determine whether the prospective beneficiaries qualified for funding and/or support, in any applicable manner.
They would then be provided with various value-added solutions for the business, such as transactional pricing (cash deposit fees, card merchant fees) offered to the beneficiary at “group preferential rates”.
Mentoring and training services would then be offered to beneficiaries in partnership with the parties and report back given to Engen on the performance of the loan repayments.
PetroCONNECT would offer training to beneficiaries through their Readiness Programme and facilitate the sale transaction, which would include the drafting of the sale agreement and conducting all legal processes required for a transition between the prospective beneficiary and seller.
It would also facilitate deposit payments to a designated trust account aligned with legal requirements and sale agreements. It would also help with facility compilation and submission of all required relevant documents by Nedbank within the funding application. The cloud based, back-office financial management service provider would also assist with the compilation and submission of the retail licence application to the Department of Energy required for the transition from the seller to prospective beneficiary, facilitate the handover process between seller and prospective beneficiary, and provide mentorship support to the incoming business owner in line with Engen and Nedbank expectations.
For the acquisition/sale process, PetroCONNECT would be in contact with the dealer to discuss the next steps of the acquisition/sale process as per Engen’s guidelines.
Once an appointment had been made and all approvals/authorisations received from the Engen Sales Department, Engen would engage with both purchaser and seller regarding the business sale agreement and the ensuing legal process.
On signature of the sale agreement, PetroCONNECT Legal adopted a tracking system to ensure all conditions within the sale agreement had been fulfilled to facilitate an effective takeover phase.
In its South Africa Oil & Gas Report, Fitch Solutions said that it expected to see an uptick in exploration activity in South Africa over 2022, supported by higher oil prices over the coming quarters.
It said that uncertainty in the regulatory environment would remain a key concern for prospective investors in the South African oil and gas sector until the Petroleum Resources Development Bill was passed.
The Department of Trade and Industry in September 2017 issued a proclamation to publicise the intention of the Department of Energy and the Petroleum and Liquid Fuels Industry to align the B-BBEE Petroleum and Liquid Fuels Sector Transformation Charter with the B-BBEE Act, the B-BBEE Codes of Good Practice and the B-BBEE Policy Framework to ultimately serve as a Sector Specific Code of Good Practice. The goal was to establish a B-BBEE Petroleum and Liquid Fuels Sector Transformation Charter Council and seek consultation with stakeholders.
The Petroleum and Liquid Fuels B-BBEE codes and scorecards apply to the following sub-sectors: liquid fuels pipelines, single buoy moorings, depots and storage tanks, oil refining and synthetic fuel manufacturing plants, including lubricants, and oil and gas trading, including imports and exports, and wholesale and retail assets/infrastructure.
While the transformation sector code was under way, fuel retailers have argued that it had proved to be slow in delivery.