Vivo Energy to invest over $550 mln in South Africa, minister says (updated)

Sasol

22/05/2024 11:52

(Adds more context and minister quotes in paragraphs 2-8, Vitol
executive in paragraph 11)
    By Wendell Roelf
       CAPE TOWN, May 22 (Reuters) - Vivo Energy, owned by
global commodities trader Vitol, will invest an initial 10
billion rand ($550.79 million) in its South African operations
following its merger with Engen, South Africa's trade minister
Ebrahim Patel said on Wednesday.
    The investment is part of a range of public interest and
competition commitments, designed to prevent job losses and
continue supply contracts with local refineries, that domestic
regulators sought when the merger was considered.
    "The company (Vivo) has committed to a minimum of about 10
billion rand over the next five years to be invested in areas
like green energy, infrastructure and the upgrading of its
operations," Patel said at a signing ceremony with senior
company executives.
    The company may invest a further 4 billion rand, subject to
feasibility, in biofuels production and marine infrastructure,
among other projects, he added.
    Besides the capital investment, there was also provision for
workers' ownership that will be financed via a vendor funding
mechanism so that workers did not pay for their shares directly.
    The agreement also requires Engen to continue buying fuel
refined from Glencore's Astron refinery in Cape Town for a
period of 15 years and from Sasol's refineries to the north of
the country for a period of up to 10 years.
    Astron Energy and Sasol had opposed the merger at
competition hearings over fears that their locally refined
products would be displaced by imports.
    "This provides a significant buffer for local refineries and
a boost to maintain and expand oil refining locally," Patel said
of a supply commitment valued at an estimated 100 billion rand
over the next five years.
        Engen and Vivo Energy formally completed the transaction
on to combine their businesses on Tuesday, after regulators
agreed in April for Malaysia's Petronas to sell its 74% stake in
Engen to Vivo Energy.
    The combined Vivo Energy group now has over 3,900 service
stations and more than 2 billion litres of storage capacity
across 28 African markets.
    "Africa and South Africa has and will remain a key focus for
Vitol's investment," Harvey Foster, Vitol's country manager
said.
($1 = 18.1557 rand)

 (Writing by Wendell Roelf and Bhargav Acharya; Editing by
Alexander Winning and Christina Fincher)
 ((Bhargav.Acharya@thomsonreuters.com))