FILE PHOTO: A Chevron gas station sign is shown in Cardiff
JOHANNESBURG - Chevron South Africa’s empowerment consortium, together with partner Glencore, appear to have inched ahead of China Petroleum and Chemical Corporation (Sinopec) in the bidding war for the multibillion-rand acquisition of the local oil company.

This follows the Competition Commission recommending to the Competition Tribunal yesterday the approval, with conditions, of the proposed merger in terms of which Off The Shelf Investments 56 and Glencore propose to acquire Chevron SA for $973million (R13.91billion).

In March this year the tribunal approved a proposed merger involving Chevron SA and Sinopec, China’s largest petroleum refinery owner.

However, Jill Koopman, the policy, government and public affairs manager at Chevron SA, confirmed that despite the prior approval by the tribunal of the Sinopec transaction, Off The Shelf 56 would have first opportunity to close the transaction.

This is because Off The Shelf 56, a broad-based black economic empowerment (B-BBEE) consortium that owns 23percent of Chevron SA with the remaining 2percent held by Chevron SA employees, exercised its pre-emptive right to acquire Chevron SA’s assets.

The remaining 75percent of Chevron SA is owned by Chevron Global Energy, which is controlled by New York Stock Exchange-listed Chevron Corporation.

Chevron SA has a refinery in Cape Town and a lubricants manufacturing plant in Durban, and was also involved in both retail and commercial wholesale marketing and distribution of petroleum products.

Concerns

It competes in the South African market with other oil companies such as Engen, BP, Shell, Total and Sasol.

The Department of Economic Development raised a number of public interest concerns related to the proposed transaction.

Sipho Ngwema, the head of communications at the commission, said yesterday that the commission found that the proposed Of The Shelf transaction raised public interest concerns in the form of impact on employment, impact on industrial sector or region and the impact on the ability of small businesses to become competitive. Ngwema said the commission had therefore recommended its approval subject to seven conditions.

They include the preservation of jobs post-merger; the continuation of Chevron SA retirees’ medical aid subsidy; and the establishment of a development fund focused on, among other things, the development of small businesses and black-owned businesses.

Other conditions were the continuation of Chevron SA’s branded marketer programme on terms no less favourable to its branded marketers; a funding commitment by Of The Shelf 56 of certain rebranding-related costs post-merger; the maintenance of a certain level of B-BBEE shareholding in Chevron SA post-merger; and a commitment to a significant investment being made to deal with refinery capacity and related matters.

The tribunal imposed 12 conditions on the proposed merger between Chevron SA and Sinopec, some the same as those imposed on Of The Shelf 56.

- BUSINESS REPORT