The Competition Commission on Thursday approved a joint venture between fuel companies Sasol, Engen and Petronas despite the possibility of the transaction reducing competition in the petroleum industry.
This merger involves a share-for-share exchange agreement in which the companies will form a joint venture named Uhambo Oil Ltd, the commission said.
”The commission today [Thursday] recommended to the Competition Tribunal that a large merger involving Sasol Oil, Engen Ltd and Engen, Sasol Ltd and Petronas International Corporation Ltd be approved,” the commission said in a statement.
One of Uhambo’s Oil first projects will be to construct a new petroleum products pipeline from Durban to Johannesburg to Tshwane, which the commission said will bring in structural changes.
The commission said the reduction of competition arose from the logistical constraints underlying the ability of other oil companies’ (OOCs) to ship adequate products inland.
”We are of the view that the proposed transaction is likely to substantially prevent or lessen competition in the petroleum industry, however, the planned introduction of the pipeline would bring in structural changes in this market,” the commission said.
It said the pipeline will have to make a transportation infrastructure available to OOCs, capable of carrying their shortfall volumes.
In terms of the transaction, Engen will acquire 100% of the entire issued share capital of Sasol. Sasol and Engen will then form Uhambo.
Petronas and Sasol, will each hold a 37,5% take in Uhambo while empowerment companies Afric Energy Resources and Tshwarisano will each hold 12,75%. – Sapa