2005-10-11,+Sasol+prepared+state+papers+plus+bedfellows,+Crotty

= **Sasol 'prepared state papers'** =


 * Business Report, Johannesburg, Front Page, October 10, 2005

By Ann Crotty**

Johannesburg - Oil giant Sasol had prepared the script that was to be used by the department of minerals and energy to explain the department's withdrawal of its objection to the formation of Uhambo, the merger between Sasol's liquid fuels business and Engen, the competition tribunal heard on Friday.

The tribunal also heard that Sasol had provided the department with a draft media statement that was to be used to explain the department's revised position.

Former justice minister Penuell Maduna, who previously had headed up the minerals and energy department and is a consultant to Sasol, will be a major beneficiary of the proposed empowerment transaction with Uhambo. He was a key player in the talks between Sasol and the department that led to the department withdrawing its objection.

On Friday Ernst Oberholster, the managing director of Sasol Oil, told the tribunal that Sasol had believed the department was supportive of the transaction. "Out of the blue we get an intervention from the department. We were flabbergasted."

In early June the department notified the competition authorities that it wanted to intervene as it had concerns about the transaction, including the possibility of Sasol effectively forcing the other oil companies out of the oil products market in and around the extremely valuable Gauteng region.

Jeremy Gauntlett, senior counsel for Total, which is objecting to the merger, said that after Sasol's initial attempts to deal with these concerns proved unsuccessful, "the former minister of minerals and energy [Penuell Maduna] then contacted the then minister of minerals and energy [Phumzile Mlambo-Ngcuka] to discuss the matter".

Maduna sent a nine-page document to the department outlining the benefits of the merger. At about the same time, Sasol's managing director, Pat Davies, met the department and discussed its objection.

By mid-June the department informed Sasol that it would withdraw its intervention. It was in response to this that Sasol undertook to write up the department's reasons for the withdrawal.

Other Sasol documents discussed at Friday's hearing appear to reveal a cynical approach by Sasol to black empowerment.

A proposal in 2002 to sell a stake in the Natref refinery to an empowerment group appeared to be motivated by the hope that this would delay the implementation of the Clean Fuels Bill.

The tribunal heard that Sasol believed that an empowerment group would be able to persuade the government that it was unnecessary for South Africa to commit to low sulphur. The Clean Fuels Bill would add significantly to refining costs.

At this stage Sasol appeared to believe that it would be in a position to persuade the government to delay building a second pipeline, which would enable the other oil companies to import oil from the coast to the inland regions and thereby reduce their dependence on Sasol for oil supplies.

Sasol shares fell 1.98 percent to R219.56 on Friday.

From: http://www.busrep.co.za/index.php?fSectionId=552&fArticleId=2939090&fPreview=1&fMakeMirror=1

= **The tale of strange of bedfellows makes for sleepless nights** =

By Ann Crotty**
 * Business Report, Johannesburg, October 10, 2005

By the end of day four of the competition tribunal's hearing into the proposed merger between Sasol's liquid fuel business and Engen, it was becoming difficult to decide which aspect of the emerging background information was the most disturbing.

Was it the description of an apparently very cosy relationship between Sasol and the government, which is at odds with the government's denunciation of Sasol and its commitment to black empowerment?

Was it that a former government minister was quickly put into a private sector position where he was seemingly able to influence the government? Was it Sasol's approach to black empowerment, which reflected not the need for change but an opportunity to secure commercial advantage from the government?

Or, given that this transaction looks as though it could be aimed at securing leadership by Sasol of a cartel of oil companies that will control the petrol price when deregulation comes, was it the prospect of the entire population having to carry the cost of higher petrol prices so that a relative handful of well-placed black individuals could score big-time on an empowerment transaction?

In explaining Sasol's efforts to persuade the department of minerals and energy to withdraw its objection to the proposed merger, Ernest Oberholster of Sasol Oil remarked: "We did what any company would have done."

Indeed, as a private sector company with shareholders, Sasol is perhaps obliged to try whatever legal methods are at its disposal to effect the best outcome for these shareholders.

To this end, it was happy to compromise environmental issues by attempting to delay the introduction of the Clean Fuels Bill; it was happy to try to undermine access to pipeline capacity by the other oil companies to secure a stronger position in the market; it was happy to force through a potentially anticompetitive merger by claiming strong black empowerment benefits; and it was happy to use a recently retired government minister to persuade the government to accommodate its plans.

Given the constituency to which it reports, Sasol is required to use its best endeavours to achieve the best it can for its shareholders.

By the same token, the government is required to do what it can to achieve the best possible outcome for all of the people of South Africa.

To this end it is obliged to act as a counter to the power of our huge corporations when that power is used to secure the interests of a small group at the expense of the interests of all the people of the country. Of course, it may be that Sasol's merger with Engen is the best possible scenario for consumers. This is something that the current scrutiny by the competition authorities is designed to determine.

But right now there are a number of very serious concerns about the proposed transaction and the government's role, intended or otherwise, in it.

Consider just two of those concerns. This deal is essentially about what we are all going to have to pay for petrol in a deregulated environment.

By seeming to throw in its lot with Maduna and his Sasol mates, the government appears of the view that it cares not what consumers have to pay for deregulated petrol, as long as its former colleagues are able to make huge profits on empowerment.

And then there's the revolving-door issue - yet again. In this case, the government is sending out a loud message that merely by employing high-profile former politicians, business will able to influence government policy.

From: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=2939108