Local consortium eyes BP assets


Local oil companies are close to acquiring BP Plc’s oil marketing assets in Zimbabwe trading as BP and Shell Marketing Services (BP) after the government dashed down an initial deal to sell the assets to Engen Petroleum, an energy company jointly owned by a Malaysian company and black South African investors.
The London Stock Exchange-listed global energy company, which risks being taken over after failing to stop the ongoing oil spill in the Gulf of Mexico, owns 72 retail sites in the country, six country depots, four town depots, a lubricants plant — now dormant — and ancillary assets, which it is currently leasing out to indigenous players.
The oil giant has since stopped supplying oil products to local operators who are currently buying fuel for resale here from the over the counter market mainly in South Africa.
This has made fuel at BP service stations more expensive compared to prevailing forecourt prices.
BP is seeking to dispose its Zimbabwean assets for an estimated $20 million after a review of its African operations in March last year.
An inside source said negotiations have swung round in favour of indigenisation following an intervention in November last year by the Ministry of Youth, Indigenisation and Economic Empowerment, one of the authorities empowered to give regulatory approval.
“The BP-Engen deal is dead,” the source said. “Engen has lost out because the government wouldn’t allow an offshore disposal and local operators are set to take over the business. But the deal is still at a very delicate stage.”
Engen is 80%-owned by Malaysian national oil company, Petronas and 20% by Worldwide Africa Investment Holdings, a black-owned South African investment company.
The Indigenisation and Empowerment General Regulations published by the government in January this year stipulated that all mergers and acquisitions henceforth would have to comply with the 51% local equity requirement provided for in the Indigenisation and Economic Empowerment Act of 2007.
Local oil marketing operators in November last year coalesced into a company called Sabrex Energy, which represents about 90% of Zimbabwe’s refined oils operators. These include major players such as Redan Petroleum, Sakunda Energy, Comoil, Wedzera and Exor.
Similar disposals will also take place in Tanzania, Malawi, Namibia, Zambia and Botswana after a review of its African operations.
Sabrex, representing the local interest, officially made an unsolicited bid for the assets in September last year after noting the BP-Engen deal would displace local operators depending on BP’s retail sites and depots, proposing to buy 100% of the marketing assets under the same commercial terms that the disposer had agreed with Engen.
Its offer entailed a joint purchase, which would then be split proportionately among the company’s composite operators after the acquisition.
Sabrex promoters, comprising Redan, Sakunda, Exor and BJP Petroleum, would take over 55% of the assets, while 35% would be allocated to bona fide local industry players vetted by the Sabrex board.
The remainder would be harnessed for an employee share option scheme as an empowerment instrument.
The new bidders also proposed providing seed equity capital of $5 million, which would be injected by the promoter shareholders, and to carry out a centralised debt fund-raising to enhance interested participants’ access to capital.
Individual retail sites and distributor country depots would also be sold the current lease-operators.