Trade and Industry Editor

SASOL's planned takeover of empowerment fuel retailer Exel advanced another step yesterday when the Competition Commission recommended the deal go through.

But the Competition Tribunal still has to give its view on the case.

The merger will bring Exel's 189 branded fuel retailers into Sasol, which is also planning to launch a large number of new outlets in its own name with the aim of a combined national network of Sasol and Exel branded service stations numbering more than 300.

The new Sasol venture will be 25% black owned in all its operations, and the new Sasol-branded fuel retailing chain will be launched in the new year, once Sasol's existing agreement with the other fuel retailers expires.

Under this agreement, Sasol has been held back from becoming a major presence in the fuel retail market in which it hopes to eventually achieve a 15% share.

The commission said that the merger was "unlikely to raise any serious competition concerns" and recommended to the tribunal that the merger be approved unconditionally.

Sasol had told the commission that the empowerment charter for the liquid fuels industry required that 25% black ownership and control of all facets of the industry.

Sasol is not yet compliant with the target, but the merger with Exel will help the firm meet it in time.

"We support the Competition Commission's rationale that the vertical integration of Exel into Sasol Oil will speed up our compliance to the empowerment charter for the liquid petroleum industry," said Sasol spokesman Johann van Rheede yesterday.

"We are eagerly awaiting the final decision by the Competition Tribunal," Van Rheede said.

Meanwhile, the merger will provide capital for expansion and growth which might not otherwise have been available to Exel.

Sasol noted in its latest annual report that it had acquired more than 140 retail convenience centres (RCCs) service stations with shops which were being leased to other oil companies.

"These will be converted to the Sasol brand during next year," said CE Pieter Cox.

"From January 2004, our full range of fuels will be marketed directly through new Sasol-branded RCCs across SA.

"Our RCCs will all feature-branded convenience stores and will be distinctive, efficient and convenient in order to better cater for the needs of motorists and consumers.

"Through our RCCs we are confident of achieving a 10% share of the local retail fuel market over the medium term.

"We plan to eventually grow our market share to about 15%," he said.

There is some nervousness among Sasol's competitors at the planned emergence of the group as a major player in the fuel retailing business.

There is a concern that Sasol will only be able to acquire the 15% of the market which it is seeking at the expense of other oil companies.

Sasol's rivals will also be eagerly watching to see whether there are any new tricks that can be brought to the nonfuel retailing operations at Sasolbranded service stations, where the shops are to be called Sasol Delight.

Dec 02 2003 07:26:12:000AM John Fraser Business Day 1st Edition