The Central Energy Fund (CEF), the state-owned company whose main asset is oil and gas firm PetroSA, is in talks with Sasol to buy petrol stations as the embattled chemicals and synthetic fuels group scrambles to raise cash to pay down debt.
"There are assets that are being sold currently for what used to be the national entity that is Sasol," the fund’s chair, Monde Mnyande, told a recent parliamentary meeting. "We are looking at those and discussing very strongly with Sasol and seeing what assets we can acquire so that we can build up our entities of PetroSA and the CEF."
Sasol is trying to slash $2bn (R35bn) off its costs and raise at least another $2bn from asset disposals in an attempt to avoid raising equity from its long-suffering shareholders.
The company landed in hot water after its Lake Charles Chemicals Project in the US ran 45% over budget, accounting for most of Sasol’s R176bn debt pile, which towers over its R48.8bn market value.
Sasol, which was worth about R200bn in January, has not specified which assets are up for sale, although it has said it was entertaining a possible partnership in its base chemicals production at Lake Charles.
CEF spokesperson Jacky Mashapu declined to comment.
The committee meeting report, obtained by Business Day, said such assets include Sasol petrol stations. Sasol has 410 service stations or "retail convenience centres" in SA which capture 11% of the regulated petrol market.
Sasol declined to comment specifically on the CEF’s approach but said it had made progress on its expedited review of the business to consider how it can be most effectively positioned to be sustainable in a low oil price environment.
"Consistent with this approach, the expanded asset disposal process has yielded good interest in relation to a number of assets, despite the macro environment uncertainty," it said.
Abdul Davids, head of research at Kagiso Asset Management, said that the service stations were likely loss-making at the moment.
"With lower fuel demand and lower margins for fuel retailers, the company might not realise full value for these assets," he said.
Wade Napier, analyst at Avior Capital Markets, said the sale of the retail business alone would not fix Sasol’s problems, "but I believe that [it has] taken the approach that anything that will help raise cash is worth considering".
Davids said it would make sense if the CEF were considering buying Secunda, where Sasol produces synthetic fuel from coal. "The way Sasol is set up at the moment, debt holders have all the say. They could foreclose on them and take over their assets," he said.
"Secunda is of strategic value to SA, given its integration in the fuel supply value chain. It would make strategic sense for government to not allow it to end up in foreign hands."
Kevin Mileham, spokesperson on energy for the DA and a member of the parliamentary committee, said the CEF had no experience in retail fuel sales and it did not fit its mandate to contribute to the security of energy supply.
He said interest in such assets was a sign of desperation on the CEF’s part. "They are looking for anything to prop up their revenues. The group as a whole is struggling — PetroSA in particular – and it’s because of a loss of focus. This is indicative of that loss of focus."
Liz McDaid, parliamentary adviser for the Organisation Undoing Tax Abuse, said it was unacceptable for the CEF to start trading and competing with private businesses, for example through buying petrol stations. "CEF’s mission is to provide and enable sustainable energy solutions, and this latest idea of CEF is like SA Tourism — a state body to promote and enable tourism — now buying up hotels and competing with existing tourism businesses."
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