Engen expands in Rwanda, Burundi and Guinea Bissau

The deal, signed on 31 July 2008 in Paris, France, comprises:

• Total's entire shareholding in its downstream businesses in Rwanda (Rwanda SARL),
  
• Total's entire shareholding in its downstream businesses in Total Burundi
  
• 85.11% shares in Total Guinea-Bissau (14.89% is held by a private investor), and
  
• 50% of Aero Services SARL (the balance is held by Petrogal Guinea Bissau Ltd).

Rwanda SARL includes 19 service stations and operates one depot, representing sales of 38 million tons a year for 22% share of the market.

Taking over Total Burundi will complement Engen's existing business in that country with 29 additional commercial customers, representing 1% share of the market (3.8 million tons per annum).

Engen's acquisition of 85.11% of shares in Total Guinea Bissau will give it access to four service stations and 37 commercial customers, for 29% market share (15.4 million tons per annum). And for 50% in Aero Services SARL Engen will obtain Jet A1 fuel storage, Avgas storage and into-plane refuelling truck capacity.

Engen CEO and MD Rashid Yusof says the deal further strengthens Engen's position on the continent. The company has this year already taken over Shell's controlling interests in two African businesses, namely Lesotho and Gabon as well as DRC interests in 2007.

Engen's International Business Development division recorded a significant increase in profits for the 2007/8 financial year, and will increasingly become a pivotal growth engine for the company.

Engen Q&A on the deals

Why are these deals seen as attractive for Engen?

"Engen views Africa as a strategically important growth engine for the company. We are committed to sustainable, profitable growth on the continent, while defending our subsidiary, Engen Petroleum Limited's leadership in our market of origin, South Africa. Engen's 10-year EPIC 2016 growth plan highlights our ambition to be among Africa's downstream petroleum product leaders by 2016. For this reason, all viable business opportunities on the continent are of importance to us. We have been highly successful at leveraging our traditional strengths in supply and operations in all our African territories, and to operate profitably wherever we have operations. Engen also exports product to 30 more countries, mostly in Africa and the Indian Ocean Islands.

As regards Rwanda, Burundi and Guinea Bissau specifically, all enjoy good GDP growth and relatively low inflation rates, and will contribute significantly to Engen's African goals."

What are the strengths and weaknesses to setting up in Rwanda, Burundi and Guinea Bissau?

"Notwithstanding tough business conditions in some respects Engen is taking over going concerns with good potential, and we foresee no difficulty in leveraging our traditional operational and supply chain excellence, and to introduce best practices in HSEQ, enterprise risk assurance, human capital support and others, to gain a leading edge in these markets."

Will the acquisitions be integrated into Engen's existing business?

"Yes. Re-branding of the operations will commence on finalisation of the deals and the Total brand will phase out in due course."

What about information technology integration?

"There will be conversion of Total's SAP financial system to Engen's AccPac system, expected to be completed by the end of November or soon thereafter."

Will you retain staff and create more jobs for the people of these countries?

"Yes; as Engen is buying these businesses as going concerns, the staff will remain the same. It is the company's strategy to invest where necessary in the local development of the country in which we operate."

Will existing business relationships be honoured?

"Yes, Engen will honour all contracts as is."

Apart from operational best practices, what can customers expect from the new shareholders?

"Customers can expect improved service levels, open, honest and transparent dealings at all levels in the organisation consistent with Engen's values of integrity, ownership, empowerment, teamwork and performance."