The acquisition of Shell's downstream business in Lesotho and Zimbabwe by Engen will provide it with an additional 200 million litres of refined petroleum products a year, says an Engen spokesperson
ENGEN Petroleum Ltd, an 80 per cent unit of Petroliam Nasional Bhd (Petronas), is buying the Royal Dutch Shell's downstream business interests in Lesotho and Zimbabwe, fuelling the South African energy company towards realising its vision to become an African champion by 2016.
Currently, the company operates retail and other commercial downstream businesses in 15 countries, while its parent company, Petronas, has interests in some 13 countries in the African continent.
An Engen spokesperson said the acquisition of Shell's downstream business interests in Lesotho and Zimbabwe will provide the company an additional 200 million litres of refined petroleum products a year, and push up its market share in Lesotho to 35 per cent.
"The Lesotho and Zimbabwean markets will make a significant contribution to Engen's vision of becoming an African champion in downstream business by 2016," the spokesperson told Business Times.
According to a statement posted on Engen's website, the company and Shell signed a sale and purchase agreement early July, but the deal is still subject to regulatory approval from the countries' governments and central banks.
In the case of Zimbabwe, the spokesman said the deal is subject to pre-emptive rights.
A Shell official, who confirmed the sale of the group's business interests in Lesotho and Zimbabwe, said the move is consistent with its global strategy known as "more upstream and profitable downstream".
However, the official said Shell remains committed to its downstream business in Africa and is seeking to focus its portfolio on markets where it can deliver maximum value for customers and shareholders.
For Zimbabwe, the official said, Shell's interests in that country were a non-consolidated joint venture covering 50 per cent of Shell Zimbabwe and 50 per cent of BP Zimbabwe, a 50-50 joint venture operated by BP.
"Shell has licensed its brand to the joint venture, therefore half of the retail network is Shell-branded. This joint venture sells 172 million litres of retail and commercial fuels, lubricants and aviation products, mainly through retail sites," the official said.
Elaborating, Engen's spokesman said its Lesotho operation currently boasts annual volumes of 36 million litres of fuel through seven retail sites, and via commercial and lubricant arrangements, for just under 21 per cent of the market.
"Engen already has interests in Lesotho, and the acquisition will see it secure 35 per cent of the market," the spokesman said.
In the case of Zimbabwe, the spokesman said Shell's Zimbabwe business, run in a joint venture with BP as the manager, sells 172 million litres of retail and commercial fuels, lubricants and aviation products, through 226 retail sites and other arrangements.
"While Zimbabwe's economy has declined sharply over the last decade, it still has good infrastructure which could form the basis of renewed economic growth, once the political crisis is resolved," the spokesman said.
The spokesman explained that under the proposed acquisition, Engen's Zimbabwe holding will be in a 50-50 joint-partnership form.
Besides Petronas' share, the remaining 20 per cent stake in Engen is held by Worldwide African Investment Holdings (Pty) Ltd.
Petronas' interest in Engen encompasses a refinery in Durban and more than 1,300 service stations across Africa.
Source : Business Times
