2005-11-18,+Sasol-Engen+deal+-+450+skilled+workers+on+street,+BDay


 * Business Day, Front Page, 17 October 2005**

= Sasol-Engen deal to put 450 skilled workers on street =

Trade and Industry Editor**
 * Carli Lourens

RETRENCHMENTS of about 450 mainly skilled people would contribute to Sasol and Engen achieving savings of up to R4bn over the next five years, if competition authorities allowed the merger between Sasol’s liquid fuels business and Engen to go ahead.

The merging parties declined to say on Friday what the total number of layoffs would be, but lawyers for rival group Total said it was far higher than initial indications.

This emerged at the halfway mark of the marathon Competition Tribunal hearing into the merger on Friday.

The Competition Commission has recommended approval of the merger, which would see a dominant force arising in SA’s fuel industry, subject to conditions. The new entity, Uhambo Oil, would control about half of the country’s fuel production capacity and about 33% of the fuel retail market.

Global oil corporations BP, Shell, Chevron and Total, as well as BP empowerment partner Masana, are trying to block the deal. Legal representation for Shell said on Friday that the Uhambo merger would lead to the retrenchment of 453 skilled people, resulting in an annual saving of about R92m.

A witness for the merging parties, Stephan Malherbe of Genesis Analytics, said those laid off would have skills of which there were shortages in the country, suggesting that these workers would be in demand elsewhere. Malherbe also suggested that the retrenchments would benefit the economy by making these valuable skills available to other groups.

The potential total savings of the deal are estimated by Malherbe at between R3,6bn and R4bn. Other savings could include operational synergies and capital investment savings, he said.

The estimated saving was “large”, but would be significantly higher if based on the prevailing exchange rate and oil prices. The saving provided a “solid commercial rationale” for the merger to go ahead, Malherbe said.

One of the opposing oil companies suggested earlier that the efficiencies were concocted to strengthen the merger case before competition authorities.

Several of the opposing oil companies have said the real reason for the proposed merger was to secure significant control over fuel prices once the market was deregulated. Sasol has sought a merger with Engen for several years in an attempt to gain significant access to SA’s fuel retail market.

From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A102808