JOHANNESBURG – Sasol executives told shareholders on Wednesday that they were disappointed by the cost and schedule overruns of the company's $13 billion (R192.24bn) US-based Lake Charles Chemicals Project (LCCP), saying they were not given accurate information by the project management team.
At the company's annual general meeting, Peter Robertson, the chairperson of Sasol’s capital investment committee, said the committee had failed and could have done a better job of predicting where the project would end up.
“I am a bit embarrassed about not being able to spot this. The only thing that I can tell you is that I wish I could have seen behind some of these numbers that were being put forward and done a better job predicting where we would end up,” said Robertson.
Robertson said despite the disappointment, it was likely that the LCCP would sustain the company for years to come.
“It's a world-class project; it is a good project. We got value for our money. The rates of return in short-term may disappoint you, but over time this is going to an important part of the group,” said Robertson.
Sasol’s outgoing chairperson, Mandla Gantsho, said it had been difficult for the committee to exercise its oversight duties given that they had been given inaccurate numbers.
He said the group was taking action against the LCCP’s project management team.
“The work of the committee was constrained by the fact that the flow of information from the project management team did not allow them to exercise their oversight duties,” said Gantsho, who has stepped down after serving on the board for six years.
Following the board’s review into the root causes of the troubles at the LCCP, the board took punitive measures, including not awarding short-term incentives for the group’s executive committee in 2019.
Sasol in May revised the LCCP’s cost guidance to between $12.6bn and $12.9bn.
Sasol’s former joint chief executives, Bongani Nqwababa and Stephen Cornwell, stepped down last month amid the troubles at the LCCP.
Environmental activists took Sasol to task for its environmental footprint.
Asked if the company's target of reducing gas emissions by 10 percent in 2030 was too weak given the climate emergency in South Africa, Sasol chief executive Fleetwood Grobler said the company had to have credible and feasible plans with its targets.
“It makes no sense in providing a false sense of target setting without a sensible plan. We cannot set targets that are not attainable. We stated this is a minimum target by 2030,” Grobler said.
He said the company would publish its emission-reduction roadmap by November next year.
In its inaugural climate report published in October, Sasol pledged to reduce greenhouse gas emissions by at least 10 percent from its South African operations off its 2017 baseline.
It said this target was over and above the 13 percent greenhouse gas emissions improvement achieved since 2004 and was challenging for a carbon-intensive petrochemicals business with limited alternative energy sources.
“However, based on our internal analysis, we believe that it is not only attainable but indeed necessary,” said the report.
Sasol shares closed 0.39 percent lower at R280 on the JSE on Wednesday.