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HDSA PROCUREMENT

Foster strategic partnerships between established white suppliers and BEE through mentorship and training programs, utilizing Sasol's buying power, operational business support, and access to finance.

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HDSA PROCUREMENT

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  1. HDSA PROCUREMENT

  2. PROCUREMENT SUPPORT MEASURES • Encourage strategic partnerships between established white suppliers and BEE • Mentorship and training programmes • Using Sasol buying power by purchasing on behalf of BEE • Operational business support through consultants hand holding • Channeling sufficient viable business to BEE’s HIGHVELD BUSINESS DEVELOPMENT CENTRE (HBDC) - SUPPLIER DEVELOPMENT PROGRAMME

  3. HIGHVELD BUSINESS DEVELOPMENT CENTRE (HBDC) • Develops and supports SMME’s to become independent businesses in SA economy • Holistic range of services • Training (past year 164 entrepreneurs) • Develop and identify market opportunities • Linkages - R30 million business for 60 trained entrepreneurs • Database development • Access to finance • Interventions with banks and financial service providers • Limited bridging finance

  4. HDSA PROCUREMENT % OF TOTAL SASOL LIQUID FUELS SPENT ON GOODS & SERVICES Jan - Jun CURRENTLY  200 HDSA SUPPLIERS IN A WIDE RANGE OF DISCIPLINES

  5. SASOL’S BEE ACHIEVEMENTS AND FUTURE PLANS

  6. STRONG COMMITMENT TO BEE CEPR pipeline gas business value - R165 million Mkumbi we Africa pipeline gas business venture in Mpumalanga Facilitated BEE participation in Black Top Holdings road binding venture Chemcity - Real Africa Investment Outsourcing of group information management systems to Comparex - R 1 billion over life of the agreement (10 years) Formation of Exel MacAdam road building franchise

  7. DURBAN SOUTH PIPELINE GAS BEE VENTURE 51% CEPR 49% Sasol Gas • Black controlled (7 groups including disabled) • CEO: Manoj Gokul • Turnover: R120 million growing to R200 million in 2005 • Bulk of financing (90%) guaranteed by Sasol R165 million JV

  8. Black Top Holdings Employee Share Trust African Value Investment Holdings (Pty) Ltd Corevalue Investment Holdings (Pty) Ltd Quickstep 21 (Pty) Ltd Tosas (Pty) Ltd 25,2% 18,2% 25,2% 13,2% 18,2% BTS Empowerment Consortium (BTSEC) (Pty) Ltd Founder Members African Value Investment Holdings (Pty) Ltd Exel Petroleum (Pty) Ltd 31% 30% 10% 29% Black Top Holdings BLACK TOP HOLDINGS - A SUCCESSFUL BEE VENTURE IN THE ROAD BUILDING INDUSTRY TURNOVER : R400 MILLIONOPERATING PROFIT : R30 MILLIONEMPLOYEES :780

  9. NDVELA AT WORK BTH AT WORK

  10. MADIBA’S ROAD MACADAM FRANCHISE TEAM

  11. EXEL’S SPECTACULAR GROWTH Turnover : R1.9 billion Operating profit : R40 million + Operating profit attributable to HDSA : R30 million + Diesel market share : 7% Petrol market share : 3% No of service stations : 140 and growing Direct employment created • Service stations : 1,890 • Head Office : 70 TOTAL CAPITAL BASE : R220 Million THE MOST SUCCESSFUL BLACK OWNED PETROLEUM COMPANY IN RSA

  12. EXEL SERVICE STATION

  13. EXEL OWNERSHIP { Forecourt attendants { 13% Women HDSA = 77.5% SASOL = 22.5%

  14. SASOL FACILITATED THE ESTABLISHMENT OF EXEL Financial supportR Million Working capital R 80 Credit for product supply R 60 Loan for service station development R 30 Loan for equity stake in Black Top Holdings R 18 Loan guarantees for HDSA equity investments R100 Loan to NABFRA/Share Capital R 2 TOTAL FINANCIAL ASSISTANCER290

  15. SUPPORT PROVIDED TO EXEL Generation of revenue • Sasol sold all its assets and business legally possible, to Exel • Product supply agreement at favourable terms • Product distribution agreement at favourable terms • Technical support agreement

  16. SUPPORT PROVIDED TO EXEL (Continued) Knowledge and capacity transfer • Secondment of Sasol staff • Training of Exel management and board members • Access to Sasol logistics network and information technology HUNDREDS OF MILLIONS OF RANDS VALUE CREATED FOR EXEL SHAREHOLDERS

  17. KEY CHALLENGES FOR THE FUTURE Challenging business environment (mature industry) • Static market • Declining nominal refinery margins • Declining real marketing margins • High capital expenditure • Refinery upgrades for clean fuels • Low returns • Increased competition - Sasol’s market entry IS OUR INDUSTRY ATTRACTIVE ENOUGH FOR BLACK INVESTORS CONSIDERING OTHER, MORE LUCRATIVE INVESTMENT OPPORTUNITIES?

  18. VARIOUS OPTIONS TO GROW BEE EXPLORED Grow Exel: • wholesale and retail exposure only Equity participation in the refinery operations • limited access to market Equity participation in integrated liquid fuels business

  19. THE ROAD AHEAD Sasol needs to restructure its liquid fuels business to allow BEE participation in the liquid fuels value chain But stay within the limitations and legal boundaries of its commercial agreements (2004) BEE VULNERABLE IF CONFINED TO ONLY CERTAIN SEGMENTS OF THE VALUE CHAIN

  20. RESTRUCTURING OF SASOL LIQUID FUELS BUSINESS COAL & GAS DERIVED FUELS BEE CRUDE DERIVED FUELS SASOL’S NEW LIQUID FUEL BUSINESS MARKETING INFRASTRUCTURE SASOL’S SHARE IN TOSAS & FFS TOTAL VALUE OF THE RESTRUCTURED SASOL LIQUID FUELS BUSINESS IS APPROXIMATELY R10 BILLION

  21. THE ROAD AHEAD: ACTIONS Appointed Nkonki Sizwe Ntsaluba and Investec Bank to assist with financing, structuring and partner selection • Build on ICASA process Seek board approval for restructuring - November 2002 Established empowerment fund to finance BEE in Sasol’s liquid fuels business • Launch: Q4, 2002

  22. REACHING NEW FRONTIERS Sasol and its BEE partners revolutionising the South African fuel industry in 2004! KEA LEBOGA ENKOSI SIYABONGA THANK YOU

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