International energy and commodities company Vivo Energy, which signed a major deal with the Department of Trade, Industry and Competition this week has committed to no merger-related retrenchments and to maintain aggregate employment for no less than four years as part of the agreement.
Energy and commodities firm Vitol has also said it will ensure its subsidiary, Vivo Energy, will bring several managerial jobs to South Africa, and establish the country as the hub of its pan-African business.
The department and Vivo signed the public interest commitments agreed as part of the transfer of ownership of the Engen business in South Africa.
“In line with the provisions of the Competition Act, we considered the impact the transaction would have on jobs, suppliers of oil, procurement and empowerment,” Trade and Industry Minister Ebrahim Patel said.
“Two competitors who are also suppliers of products to Engen, raised their own concerns regarding the impact on local refineries. Government engaged both the merger parties as well as the competitors to fully understand these implications and to consider ways to mitigate these,” he said.
He said the department and Vivo Energy signed the framework agreement confirming the public interest terms that Vivo/Engen will be implementing.
Vitol has further committed to establishing a worker ownership trust for the benefit of the 2 100 employees of Engen, which will hold an initial 5% stake in the company, rising to 9% over the next seven years
The deal commits Vitol to investing R9.85-billion over five years in its retail and fuel infrastructure, as well as in the development of renewable energy generation capacity.
The investment may increase by a further R4-billion subject to the outcome of feasibility studies in areas such as marine infrastructure, as well as sustainable and biofuel production, which could see the capital commitment increase to nearly R13.85-billion over the five years.
In addition, Vitol has committed to continue its off-take agreements for petrol, gas and diesel from Astron’s refinery in Cape Town and Sasol’s refineries in Sasolburg and Secunda, with an estimated R100-billion of locally refined products to be bought by Engen.
A further R240-million will be contributed to the Localisation Support Fund, bringing the total capital committed for localisation by partner firms to more than R800-million, to be used for technical and market studies in support of localisation and export promotion.
On transformation, the trust will be entitled to one nominated appointee to the board of Engen; and will further benefit from a minimum annual dividend over the next five years, irrespective of the profit performance of Engen, which will equate to R10 500 per annum per worker.
Patel said the commitments were a strong and clear signal of investor confidence in South Africa’s economic growth.
