Sasol still has expansion into SA’s higher-margin fuel retailing sector in its sights. President and joint CEO Bongani Nqwababa does not want to be drawn on specifics but he says the best way to expand is through acquisitions.
The majority shareholders in two fuel retail brands have assets on the market: Chevron’s Caltex petrol forecourts and the Engen chain of Malaysia’s Petronas.
Until 2000 Sasol, which received considerable state support in its early years of setting up a synthetic fuels manufacturing facility in SA, had the "blue pump" agreement. This meant all petrol retailers in SA had to buy synfuel from Sasol according to their market share.
Since 2000, Sasol has supplied other oil companies on normal commercial terms and has been allowed to compete with them in petrol retailing.
In the year to February, Sasol’s liquid fuel sales in Southern Africa were flat at 61.3m barrels. It is forecasting a similar level of sales in the current financial year. Nqwababa says Sasol produces about 30% of SA’s fuel but has only a 10% market share in retail sales as the rest is sold to other oil companies or directly to commercial customers.
Expanding the Sasol retail brand is a slow process, he says. Sasol is opening eight to 10 branded forecourts a year.
An acquisition would add size more quickly; however, it is a longer-term plan, not an immediate target.
Sasol also has a presence in fuel retailing in Mozambique through a joint venture with state-owned Petromoc. Nqwababa says the focus is very much on SA, and other African markets may be below the necessary scale.
In the short term, Sasol is focusing on completing its major capital projects at Lake Charles in Louisiana, US and developing more gas in Mozambique.
In the year to June Sasol paid a dividend of R14.80, 20% less than last year’s, as headline earnings fell 17% to R41.40/share.