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Tuesday, May 28, 2024

Shell’s Departure from South Africa: Implications for Petrol Stations

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Skhumbuzo Masiko
Skhumbuzo Masikohttps://satrucker.co.za/
Skhumbuzo Masiko is a professional trucker and story producer with over 5 years of experience.

The recent announcement of Shell’s intention to exit its operations in South Africa has sparked concerns regarding potential job losses and the availability of filling stations.

However, according to Peter Morgan, CEO of the Liquid Fuels Wholesalers Association of South Africa, there’s no need for immediate panic.

In an interview with Cape Talk, Morgan reassured the public that Shell is likely to follow a similar pattern as it has in other African countries, where it leaves behind a smaller sub-brand while retaining a share in the market.

He explained, “Don’t panic. What Shell is saying is they’re not going to close down their retail network if they do what they did in the rest of Africa.”

This indicates that approximately 600 forecourts under Shell’s banner are not immediately threatened, and there’s no imminent risk of complete shutdown.

Instead, Shell is expected to establish a smaller sub-brand called Viva, which will maintain a 20% stake while finding an 80% partner.

According to Morgan, this strategy aligns with the approach of other major oil companies across Africa.

Reports of Shell’s potential departure surfaced in early May 2024, stemming from a dispute with its long-term Black Economic Empowerment (BEE) partner, Thebe Investment Corporation.

Thebe Investment Corporation, holding a 28% share in Shell Downstream South Africa, claims that Shell deliberately prolonged resolving their dispute to facilitate its exit from the country.

The disagreement originated in 2022 when Thebe expressed its intent to exercise its “opt-out” clause and cash out to reinvest funds in company growth.

However, Shell’s delayed response and subsequent reversal of valuation figures left Thebe feeling aggrieved, labelling the situation “The Great Dutch Heist.” Despite requests for comment, Shell Downstream South Africa declined to address the matter, citing confidentiality.

Shell’s decision to divest from its South African retail, transport, and refining operations follows a global review of its downstream and renewables business.

This move marks the end of a significant presence in South Africa, where Shell has operated since 1902 and held exploration rights granted by the Department of Mineral Resources and Energy.

The implications of Shell’s departure raise questions about the future of the petrol station landscape in South Africa and the broader energy sector.

As discussions unfold, stakeholders are urged to closely monitor developments and their potential impacts on the industry and economy.

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