Sasol, the chemical and energy behemoth that supplies roughly 40% of South Africa’s fuel, has warned of the impact ailing state-owned businesses are having on its operations. However, it is pleased by the rising collaboration among itself, Transnet, and Eskom.
On Thursday, the synthetic fuel and chemicals manufacturer announced a drop in annual earnings, which it ascribed in part to the underperformance of SA’s state-owned industries.
During an investor presentation, Sasol CEO Fleetwood Grobler stated that Transnet’s faulty railing service rendered the chemicals division unable to transfer merchandise to the shore in some cases, resulting in either delayed or lost sales.
Sasol’s decision to transport items by road rather than rail increased logistical costs by 27%.
These difficulties reduced Sasol’s Chemicals Africa business’s bottom line by somewhat more than R1 billion. This segment’s earnings before interest and tax fell by roughly a quarter to R17.7 billion in the fiscal year ended June 30, although it was also pressured by lower sales prices.
Grobler, on the other hand, said he was encouraged by Sasol’s productive contacts with Transnet and Eskom.
“One of the aspects that we are dealing with is our trajectory between Sasolburg and Secunda, concerning ammonia rail tank cars, where we have worked with them jointly to put more rolling stock under Sasol’s watch … as well as that we assist with the maintenance of that rolling stock,” said Grobler.
“These are ongoing discussions. But we’re encouraged by the collaboration that we’ve seen.”
He said Sasol had also seen improvement in recent months concerning other rail trajectories to Richards Bay, and into the port of Durban.
“We’re looking forward to an improvement. I think the government is pulling out all the stops to improve the situation. So from a collaboration point of view, I’m encouraged,” he said.
Grobler mentioned Sasol is one of the companies that recently signed the CEO promise to assist the government in driving change in key sectors critical to economic recovery.
The three focus areas are logistics, energy, and crime and corruption, but according to Grobler, Sasol has had a considerably larger role in the first two.
On energy, he stated that Sasol is assisting Eskom in terms of its leadership in power stations, by looking at key performance indicators to manage those power plants in a more sustainable manner.
He did, however, say that Sasol has discovered that Eskom already has “top notch” personnel working on those goals.
“So, we can just bring further experience to what we have had in our own power-generation facilities. And I think that just adds to a more robust recovery plan for energy availability in South Africa”, Grobler said.