Page 14 - AfrOil Week 17 2020

AfrOil
NEWS IN BRIEF
AfrOil
“As a result of the steps taken, ADM has posi- tioned itself to better withstand current market volatility and still pursue its core investment strategy. In fact, undervalued assets that were already due to be divested by oil majors have now seen their value depress further and may yet represent attractive investment opportunities once we move beyond this immediate market environment. In the near term, the Board will continue to closely monitor the impact of the pandemic and will update the market should there be a further change in circumstances.” ADM Energy PLC, April 27 2020
African Energy Chamber calls on Bank of Central African States to relax forex rules
The African Energy Chamber has joined oil industry stakeholders in calling on the Bank of Central African States (BEAC) to relax its cur- rency controls rules adopted in June 2019.
Last year, the BEAC introduced new rules controlling the flows of currency in Central Africa in a bid to promote financial transparency and ensure that oil revenues stay within local economies and local banks. While the Chamber continues to support sound and transparent rev- enue management and distribution across the oil and gas industry, these specific rules have cre- ated a very unattractive environment for foreign investors seeking to invest in CFA union states.
The new rules notably state that all foreign exchange transfers over $1,680 be vetted for approval by the bank and that all export pro- ceeds above $8,400 be repatriated in 150 days to a local bank account. Unfortunately, such con- trols are causing transaction delays and prevent- ing foreign investors to repatriate proceeds from their investment, which is a key condition of any attractive investment jurisdiction. With such controls and rules in place, CEMAC will suffer and becomes less attractive to credible investors.
Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, had quickly reacted and called the measures deadly for the local oil and gas industry, stating that they could destroy economies and make it impossible to attract investments. Local and regional entrepreneurs will suffer and the oil sector will see a decline in investment.
Given the current scenario of historic low oil prices and COVID-19 pandemic, the Chamber is urgently calling on the BEAC to listen to indus- try voices and concerns and relax such currency controls to maintain the region’s attractiveness as an investment destination.
“The FX Regulations adopted in June 2019
make it very difficult for our companies to compete and create employment, and render our business environment very unattractive for foreign investors. Given the worsening of the region’s economic outlook in light of the COVID-19, the industry needs urgent action on the relaxing of these FX Regulations,” declared Obiang Lima.
Following the release of Africa’s Energy Commonsense Agenda this week, the Chamber believes that reforming business environments across Africa should be a priority for every reg- ulator and all central banks, in order to ensure swift economic recovery and make the continent more competitive on the global stage.
African Energy Chamber, April 27 2020
Sasol to implement
additional cash
conservation measures
amid market volatility
Sasol today announced it was implementing additional cash conservation measures to pro- vide a further buffer against short term volatility due to the continued negative impact of COVID- 19 on market demand.
Earlier this month, Sasol announced that as part of a comprehensive response plan it had set a cash conservation target of $2bn by June 2021, focusing on management self-help measures aimed at increasing business efficiencies.
“While we are making good progress on our target, the low oil price and impacts of COVID- 19, and in particular the national lockdown in South Africa, has led to a steep decline in fuels demand,” said Sasol President and CEO Fleetwood Grobler. “Given our assessment of the market and current developments, we are implementing further measures to increase cash
conservation during this period.”
In addition to material cut-backs in capital,
significant reductions in external spend, and ongoing work targeting a significant reduction in working capital, Sasol will implement a num- ber of actions aimed at reducing employee-re- lated expenses.
The company is in discussions with its respective Retirement Funds’ Boards of Trus- tees to suspend the employer contribution to the Sasol South Africa retirement funds, for an eight-month period up to December 2020. In countries where a suspension of employer con- tributions are not possible, an equivalent salary sacrifice or a sacrifice to other benefits will apply.
A fee reduction of 20-40% will be imple- mented for the Sasol Limited Board of Directors, across all fees. The Group Executive Committee will also implement a salary sacrifice of 20% up to December 2020.
As CEO, Grobler’s salary sacrifice comprises two parts. For three months, 33% of his salary will be donated to the Solidarity Fund set up by the South African government to support the fight against COVID-19. For the remaining five months, a salary sacrifice of 20% will apply as part of the company’s cash conservation drive.
The company will also introduce a global sal- ary sacrifice for employees from supervisory and specialist levels upwards, who do not form part of collective bargaining arrangements. This will be implemented in line with the respective legal requirements in different countries, according to a sliding scale. The scale ranges from 20% for employees in executive to senior manager levels to 10% for employees at supervisory levels, for a period of eight months.
Furthermore, Sasol will forgo salary increases in the new financial year, to all employees outside of its collective bargaining arrangements glob- ally, and no short-term incentives will be payable this year.
Sasol, April 23 2020
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Week 17 29•April•2020