Siseko Njobeni
28 August 2008
Johannesburg — PETROLEUM products group Engen is on a buying spree as it feeds its seemingly big appetite for downstream acquisitions in its quest to be a market leader in southern Africa.
The group, owned by Malaysian national oil company Petronas (80%) and black economic empowerment group Worldwide African Investment Holdings (20%), has opened its cheque book as it consolidates its footprint in the rest of Africa.
Following hot on the heels of other recent acquisitions, Engen announced it is about to lay its hands on Total's downstream operations in Rwanda, Burundi and Guinea-Bissau.
Engen has a presence in 15 countries and is SA's leader in downstream refined petroleum products, holding 26% of the market.
The deal entails the acquisition of Total's entire shareholding in its downstream businesses in Rwanda; 100% of Total Burundi; 85,11% of Total Guinea- Bissau and 50% of Aero Services Sarl , Total's interest in the aviation business. The Rwandan assets include 19 service stations and a depot, representing sales of 38-million tons a year, a 22% share of Rwanda's market.
The 85,11% stake in Total Guinea-Bissau comes with four service stations and 37 commercial customers, representing a 29% market share.
With Aero Services Sarl , "Engen will obtain Jet A1 fuel storage, Avgas storage and into-plane refuelling truck capacity", the company said .
Engen CEO Rashid Yusof said : "We see this as another solid step in our expansion. Engen has returned profits in every country where it has operations in sub-Saharan Africa and our outlook is positive for these three countries. They are experiencing good gross domestic product growth and relatively low inflation rates."
Engen says the deals will be finalised before the end of this year "subject to approvals and pending business integration".
These are the latest of several international acquisitions Engen has made recently.
In terms of its E pic 2016 strategy, Engen wants to be the number one or two in its market in southern Africa by 2016.
The group says its international business development division is a "pivotal agent" for the realisation of the strategy.
By 2016, Engen wants its international operations to contribute 30%- 35% of the group's sales volumes, generating up to R1bn in operating income, according to the group's corporate report.
In December the group acquired 60% of Shell in the Democratic Republic of Congo . The Congo government owns the other 40%.
Engen spokeswoman Tania Landsberg said the company rebranded the garages acquired as part of the transaction.
Earlier this year Engen bought Shell's downstream assets in Gabon, giving it a 28% market share in that country. It is also finalising the acquisition of Shell's downstream businesses in Lesotho, in which it already has assets.
Landsberg said Engen's growth strategy entails a combination of organic growth and mergers and acquisitions.
Not even the politically and financially troubled Zimbabwe is out of bounds, where the group has set its sights on Shell's downstream businesses .
Landsberg said negotiations on the transfer of these assets are continuing. Zimbabwe had good infrastructure which would form the basis of renewed economic growth, Yusof said .
Commenting on the group's report, Yusof said the achievement of Epic 2016 is the main focus in the year ahead.
In the past financial year, Engen's sales rose 2,7%. The group said it had reduced working capital with fewer customer credit limits and past due payments. These, and a drop in inventory levels, offset the rising cost of petroleum products.
Fuel sales through service stations increased by almost 2,5% compared with the previous corresponding period.
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
