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Sasol South Africa’s Mozambique pipeline sale is a win-win

By Xolisa Phillip, in Johannesburg
Posted on Monday, 24 May 2021 15:54

South African Sasol's US$ 1.2 billion Natural Gas Venture was officially inaugurated on June 1, 2004..
South African Sasol's $1.2bn Natural Gas Venture was officially inaugurated on June 1, 2004 by Mozambique and South Africa. Reuters/Juda Ngwenya

Sasol South Africa is selling down 30% of its stake in the Republic of Mozambique Pipeline Company (Rompco). In doing so, it is effectively killing two birds with one stone, two analysts tell The Africa Report.

First, the proposed transaction will help generate cash and to shore up Sasol’s balance sheet. Second, the selling down forms part of a broader strategy to exit non-core assets through targeted divestments. Most important, is that Sasol will still have access to cheap gas from Mozambique to use at its South Africa operations, in particular at Secunda.

In March 2020, following the onset of the Covid-19 crisis which precipitated a plunge in global oil and chemical prices to record lows, Sasol instituted a range of measures to ease pressure on the company’s highly geared balance sheet. Added to this was the volatile rand-dollar exchange rate.