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Overview of Sasol Oil’s business and its Black Economic Empowerment (BEE) programme
Presentation to members of Minerals and Energy PPC: 1 September 2006
2
Overview of Sasol Oil’s business
Progress on ownership, board representation and management control
Progress on employment equity
Progress on BEE procurement and enterprise development
Corporate social investment and skills development
Presentation Themes
Overview of Sasol Oil’s business
4
How was Sasol Oil structured?
Rationale: Sasol Oil business was
restructured and designed to give effect to the Liquid Fuels Charter requirements
Compete on an equal footing with the foreign owned oil companies’ businesses in South Africa
Liquid Fuels activities of Sasol Group at the time the Charter was signed
Sasol Mining Sasol Synfuels Sasol Oil
Restructuring was required:
Natref shareholding
Refining crude oil
Manufacturing
Chemical and fuel components
Blending fuel components into final liquid fuel
products
Marketing
MSA and Blue Pump
Agreements
5
Essence of Component Supply Agreement (CSA)
Salient features of CSA:
An evergreen supply agreement dated July 2003
Sale of 100 000 barrels (bbls) per day of fuel components to produce final products
Exclusive for the first 10 years
Equivalent to a typical coastal crude oil refinery
Sasol Oil owns the blending plant and storage facilities (Replacement value of +/-
R1billion)
This margin is referred to as the “Virtual Refinery Margin”
Margin equivalent to that earned by a typical coastal refiner.
Price paid for components is BFP – Discount (Virtual Refinery Margin)
All components must be able to be blended to comply with product specifications
(current and future)
6
What benefits does this arrangement have for Tshwarisano and Sasol?
A majority share in an inland refinery as well as earning a refining
margin similar to that enjoyed by the businesses of the foreign owned
oil companies in South Africa from CTL
Significant blending and integration of feedstock synergies are
maintained between Sasol Synfuels and Sasol Oil’s share in Natref
Sasol can honour its commitments in terms of the charters for various
sections of its businesses e.g. mining, liquid fuels, etc. and for the
different empowerment partners for these businesses
The cost for a single empowerment grouping to acquire a meaningful
stake across all of the Sasol businesses would be challenging
7
Sasol OilPurchasing of synfuel fuel
components & crude oil
Synfuels fuel
components blending &
storage activities
Joint Ventures: Natref, TOSAS,
Exelem, NLF & PeSS
Fuel Oil
Direct marketing through Sasol/Exel
brands
Wholesale marketing to
foreign owned and emerging
companies and product trading
>8,5 million m³ white fuel production capacity
0,5 million m³ residual products production
Wholesale supply agreements
Sasol/Exel retail brands Commercial marketing Africa overland and
deep sea exports
Marketed throughMarketed through
Sasol Oil salient features
75% Sasol Ltd & 25% Tshwarisano
8
KNNC
WC
EC
FS
NW Mp
Lp
Gt
Natref (63.6%)
153
38
1333
24
33
22
41
19
How successful has Sasol Oil been in establishing a marketing footprint?
Average throughput per service station
Industry 230 kl p.m.
Sasol 360 kl p.m.
Exel Franchised 258 kl p.m.
Exel dealer owned 138 kl p.m.
Market share of 8% in the retail market
# Sites
Sasol branded @ 163
Exel branded @ 215
Small share of the Commercial Market in RSA @ 6%
Reasonable marketing success given market entry in January 2004
9
Sasol Group is a significant investor in SA
We invested 80% of our capital expenditure programme in SA during the last 2 years
We invested 80% of our capital expenditure programme in SA during the last 2 years
-
2.00
4.00
6.00
8.00
10.00
12.00
FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06
R B
illio
ns
Attributable Profit SA Capital Investment Foreign Capital Investment
As a South African company we: contribute 4,4% of SA’s GDP are the biggest industrial investor in SA create wealth of R27 billion pa create jobs for 140 000 South Africans are the biggest private R&D spender in SA have plans for further expansions in SA
10
How much tax do we pay?
We are South Africa’s biggest tax payer Our effective tax rate is above average at 32%
Company A
Company B
Company C
Company D
Company E
Company F
Company G
Company H
Company I
Company J
Company K
Company L
Company M
Sasol
We are a major contributor to the fiscus
11
Foreign exchange saving of synfuel vs. alternate supply sources in South Africa
Beneficiation of own resources saves more forex and diminishes supply risk much better than imports of either final product or crude oil
Beneficiation of own resources saves more forex and diminishes supply risk much better than imports of either final product or crude oil
0
10
20
30
40
50
60
70
80
90
Imported product Typical Crude OilRefinery
Synfuels
$/b
arr
el
Cost of import Forex Saving
ProducerPrice(BFP)
12
Energy security tops global agenda
shortfall requires
alternatives
Projected demand
SA imports a major portion of its crude, and an increasing portion of final product – we are exposed to supply vagaries caused by weather or war
Projected global oil supply
13
There are alternatives to conventional oil
proven reserves of fossil fuels will sustain the world only for a limited period at current production rates
Sasol’s CTL and GTL technologies play a leading role in the future supply of global energy needs
global distribution of coal reserves
proven reserves to
consumption ratio
6 nations in the world control 80% of the
global coal reserves
14
Reliance on fuel imports growing in SA
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
-
1.0
2.0
3.0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Bill
ion
Lit
res
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
-
2.0
4.0
6.0
Petrol Diesel Kerosene White Product
Projected SA* fuel supply/demand balanceAt 6% GDP growth assumptions
At 6% GDP growth
a 150 000bbl refinery is required by 2011
fuel demand is projected to grow at more than 2,5%
first phase 10% expansion of synfuels included
SA importing fuel when the current account balance is already under pressure
Progress on ownership, board representation, management and control
16
Tshwarisano – Pulling together with our new empowerment partners
Tshwarisano BEE transaction effective from 1 July 2006
Value of the transaction is R1.45 billion
Largest BEE transaction in the liquid fuels industry in South Africa
Ownership - 25% BEE ownership across value chain
Broad-based - Direct beneficiaries include hundreds of thousands of historically disadvantaged South Africans
Black women - More than 50% of the beneficiaries are black women
25% Equity 25% Equity
17
Ngazana Liquid Fuels
Ngazana Liquid Fuels
Batho TrustBatho TrustPhakisang
InvestmentsPhakisang
InvestmentsNozweniNozweni Auto
workers Funds
Autoworkers Funds
17.9% 7.7% 5.6% 20.4%
PulaNalaPulaNala LelethuLelethu TswelopeleTswelopele
Ayabonga Oil Pty LtdAyabonga Oil Pty Ltd
5.1% 20.3% 6.5% 0.8%
5.1% 5.1% 5.1%
TSHWARISANO LFB
TSHWARISANO LFB
AKA Liquid Fuels
Pty Ltd
AKA Liquid Fuels
Pty Ltd
14.7%
FormerExel (Powerlib) Shareholders
FormerExel (Powerlib) Shareholders
Amandl’ EmbokodoAmandl’
Embokodo
5.1%
Warehouse Trust
Warehouse Trust
Tshwarisano shareholding structure
100%
SASOL LIMITED
SASOL LIMITED
SASOL OIL (PTY) LTD
SASOL OIL (PTY) LTD
CEPPWAU InvestmentCEPPWAU Investment
25% 75%
100%
1%
18
It is a broad-based BEE group consisting of: +150 000 direct shareholders + 2 800 000 indirect beneficiaries
The demographics of the group are: 54% women substantial rural representation 3% youth 2% disabled
This confirms the broad-base structure of Tshwarisano which will benefit a large number of disadvantaged South Africans
“An enduring broad-based group with a significant proportion of women”
Tshwarisano Profile
19
25% BEE ownership and control of all facets of Sasol’s liquid fuels
Exercise full voting rights immediately
Senior debt R1.14 billion to be guaranteed by Sasol
Sasol’s contribution to Tshwarisano R millionFinancing facilitation (interest rate benefit) 450
Cost of guarantee 170
Cash contributions (facilitation to buy shares on behalf of some broad-based groups)
31
TOTAL 651
Sasol’s facilitation of BEE transaction
Sasol participated fully in financing mechanismSasol participated fully in financing mechanism
20
Scope of BEE transaction
Participation in all facets of Sasol’s liquid fuels businessParticipation in all facets of Sasol’s liquid fuels business
Sasol Oil
Sasol Oil
Depot network and other logistics
Depot network and other logistics
Synfuels fuel components sourcing
and blending
Synfuels fuel components sourcing
and blending
Crude Oil trading and shipping
Crude Oil trading and shipping
Storage and dispatch of fuel components Storage and dispatch of fuel components
Wholesale, commercial & retail
Wholesale, commercial & retail
Sasol’s 64% interest in Natref refinery
Sasol’s 64% interest in Natref refinery
Fuel oil and Lubricants businesses
Fuel oil and Lubricants businesses
Sasol’s shares in TOSAS, Exelem, NLF
& PeSS
Sasol’s shares in TOSAS, Exelem, NLF
& PeSS
21
Tswarisano and board representation
TSHWARISANOTSHWARISANO
6 directors
SASOL OILSASOL OIL 3 executive directors
SASOL LIMITEDSASOL LIMITED
3 directors All HDSA of which one
woman
One HDSA
Three HDSA of
which two women
Full shareholder rights & 58% HDSA (25% women) on Board
22
Sasol Oil executive team
GM, Natref:
Oscar Volkwyn
50% HDSA (20% women) who support and understand the spirit of the Charter
Managing Director, Sasol OilErnst Oberholster
GM, Manufacturing&Supply:
Henri Loubser
MD, Fuels Marketing:
Maurice Radebe
Manager, Finance:
Feroza Syed
Manager, HR:
Dawid Heymans
Manager, Strategic Planning:
Johan Thyse
Manager, Commercial
Support & Compliance:
Chris Venter
Manager, Legal Services:Kate Farina
Manager, Quality &
Technology:
Poovin Naidoo
Progress on employment equity
24
Employment equity progress and targets
30 31 33
4246
50
0
10
20
30
40
50
60
2003 2004 2005 2006 2007 2008
*HDSA Target
68% of Sasol Oil’s TOTAL EMPLOYEES
80%(HDSA) / 60% (women) appointment policy
* Excluding white women
Supervisory level and above
Nu
mb
er
of
emp
loy
ees
25
BEE participation in Sasol/Exel retail network
46% HDSA (women = 12%) & 75% HDSA appointment policy
4%8%
14%19%
55%
0
10
20
30
40
50
60
White Men African Indian WhiteWomen
Coloured
%
Progress on preferential procurement and enterprise development
27
Progress on preferential procurement (excl. crude)
0
5
10
15
20
25
30
35
40
2001 2002 2005 2006
%
Actual Target
Exceeds Charter compliance
7% 6%
23%
34%
28
Crude Oil BEE Procurement
Procures around 20 million bbls of
crude oil p.a
13 million bbls (65%) term crude from
Saudi Arabia (ARAMCO) & Iran
(NIOC)
7 mil bbls (35%) bought on spot basis
from countries like Nigeria, Angola,
UAE. Oman and Yemen
For various reasons the ongoing term
contracts with ARAMCO and NIOC
do not provide room for meaningful
BEE participation
Sasol Oil aims to achieve a target of
50% of its spot crude oil requirements
from approved BEE crude suppliers
FY04/05 FY05/06 to dateVolume barrels Volume barrels
Total purchases 13,691,132 12,250,000
BEE purchases - - % BEE 0.00% 0.00%
FY03/04 FY04/05 FY05/06 to dateVolume barrels Volume barrels Volume barrels
Total purchases 7529321 7,105,884 6,957,295
BEE purchases 1254347 1,738,231 3,342,979 % BEE 16.66% 24.46% 48.05%
FY04/05 FY05/06 to dateVolume barrels Volume barrels
Total purchases 20,797,016 19,207,295
BEE purchases 1,738,231 3,342,979 % BEE 8.36% 17.40%
Term Crude oil imports ( Saudi Arabia and Iran)
Spot Crude oil Imports.
Total Crude oil Imports.
48% of spot & 17% of total crude oil purchases
29
Empowering emerging fuel and gas wholesalers
Lavela
GTL
Resources
Marketing
Sky Oil Heartening
Reatile
Royal
Vuyo
480 million
litres p.a
Fair opportunity created for HDSA companies
30
Sasol’s Integrated Energy Centres (IeCs)
Private public partnership flagship
Objective = make energy accessible to rural communities
Product bouquet and services: IP, candles, LPG, petrol and diesel & provide energy-
related training and advisory services
Staff trained at our Sasolburg Academy & supplied with Sasol forecourt uniforms
Total investment of R15 million in IeCs located within government identified poverty nodes.
Caba Mdeni in the Eastern Cape
Laxey in the Northern Cape
Mutale in Limpopo
A fourth IeC will be developed in Makgobistad in the North-West Province
Sasol Oil board approved a further R8 million to continue expanding this initiative
Qunu in the Eastern Cape
Another in KwaZulu Natal
Corporate Social Investment and skills development – Sasol group perspective
32
Corporate Social Investment allocation – 2005/6
Education35%
Job creation25%
Arts and culture and sport development
5%
Environment5%
Crime prevention5%
Health and Welfare25%
33
Skills development initiatives
Accelerated Leadership Development Programme Develop Sasol’s new leadership
Placement of unemployed HDSA graduates
To insert ALDP Picture
34
Investment in critical skills: science mathematics and technology
Aim : to improve the performance of school learners in Aim : to improve the performance of school learners in Mathematics, Science and TechnologyMathematics, Science and Technology
CSIR15 m
BursariesR30 m
SponsorshipR6 m
Sasol Research &Development
R23 m
R74 m
• educator development• competitions• direct interventions with learners• creating infrastructure• resource provision• research• resource centres such as Osizweni & Boijhorisong
• Techno X• Scifest
35
Demographic of Sasol Bursary Scheme
43
22
3
32
38
17
5
40
25
96
59
36
27
9
27
44
11
0
44
59
9
0
32
54
14
3
2933
17
0
50
38
1515
31
0
10
20
30
40
50
60
ChemicalEng
MechanicalEng
ElectricalEng
ControlEng
Mining Eng IndustrialEng
Chemistry Geology Other
White Indian Coloured African
%
%
Chemical Eng 57% Chemistry 46,2% Electrical Eng 75,1%
Electronic Eng 63,6% Geology 66,7% Industrial Eng 40,9%
Mechanical Eng 62,2% Mining Eng 55,6% Other 61.6%
Overall 57% Male 63,3% Women 36,7%
49,75% 14,25% 7,50% 5,25% 4,50% 5,50% 8,50% 1,50% 3,25%
HDSA %
Over 500 bursars 58% Black students
R 30 million to build the capacity
36
Jointly we will “pull together” to grow the South African economy
Pumping the economic transformation process
THANK YOU
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