PETROSA’s plans to enter the fuel retail market have been scuppered after Malaysian oil giant Petronas pulled out of a deal that could have seen SA’s national oil company taking control of Engen.

 

The deal, worth about R18bn, was set to transform PetroSA from a primary supplier of fuel to a major player with an extensive distribution and retail network, but the Malaysians pulled the plug on it a week before Christmas due to a lack of funding.

 

The Treasury was not convinced by the business case made by PetroSA. There was concern that PetroSA’s balance sheet could not carry the debt. In 2009, the company had cash holdings of R11bn, but that has shrunk to R5bn today.

 

PetroSA planned to buy the 80% stake of Engen held by Petronas, and November was set as the deadline to conclude the deal. The purchase would have included Engen’s entire retail fuel business and its ageing refinery, which would have required a refit or decommissioning.

 

On December 17, Petronas sent a letter to PetroSA CEO Nosizwe Nokwe-Macamo and Energy Minister Tina Joemat-Pettersson, informing them the deal was off the table.

 

The letter was kept under wraps until last week, when board members began asking for progress reports on the deal.

 

PetroSA vice-president of corporate affairs Zama Luthuli on Monday confirmed receipt of the letter but declined to discuss its contents.

 

"I can confirm that our CEO, Ms Nosizwe Nokwe-Macamo, received a letter dated December 17 2014 from Petronas. The matter will be dealt with at the next PetroSA board meeting before the end of January 2015," she said.

 

"Until that process is finalised, we are not in a position to comment further on the matter."

 

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Source: Business Day