The Competition Tribunal has approved the proposed merger between Engen and Vitol, albeit with stringent conditions.
The merger, currently under review by the South African Competition Commission, has sparked concerns regarding potential ramifications on the petrochemical landscape. Worries include customer foreclosure, the displacement of locally refined petroleum products by imports due to considerable storage tank capacity, and possible information exchange in the liquefied petroleum gas (LPG) market.
Engen and its affiliates must procure products from Sasols and Astron Energys refineries under supply contracts that outline minimum procurement volumes, terms, pricing principles, and dispute resolution provisions.
Furthermore, Vitol must institute an Employee Share Ownership Plan (ESOP) within six months, starting with a 5% shareholding in Engen Petroleum, which will gradually increase to 9% within seven years. The ESOP primarily targets Engen employees, emphasising compliance with B-BBEE Codes. Vitol must also maintain Engens total headcount for four years post-transaction and refrain from merger-specific retrenchments for three years.
Engen will make substantial investments in maintaining and expanding its operations within South Africa.
To bolster South African exports, Vivo Energy (Vivo) has pledged to increase its pan-African procurement of South African goods and services. Furthermore, Vivo will help South African companies export fast-moving consumer goods to African countries where it operates a retail service station network by facilitating introductions to network partners.
Sign up to receive our newsletters and magazine free - click here.
