Vivo Energy, a company owned by global commodities trader Vitol, is set to invest an initial R10 billion in its South African operations following its merger with Engen, as announced by South Africa’s trade minister, Ebrahim Patel, on Wednesday. This investment is part of several public interest and competition commitments aimed at preventing job losses and maintaining supply contracts with local refineries, which were conditions domestic regulators imposed during the merger review. “Vivo has committed to investing a minimum of about R10 billion over the next five years in areas such as green energy, infrastructure, and upgrading its operations,” Patel stated at a signing ceremony with senior company executives. Additionally, the company may invest an extra R4 billion, subject to feasibility, in projects including biofuels production and marine infrastructure. Besides the capital investment, there is also a provision for workers’ ownership, financed through a vendor funding mechanism, ensuring that workers do not pay for their shares directly. The agreement also requires Engen to continue purchasing fuel refined from Glencore’s Astron refinery in Cape Town for 15 years and from Sasol’s refineries in northern South Africa for up to 10 years. Astron Energy and Sasol had opposed the merger at competition hearings due to concerns that their locally refined products would be displaced by imports.
“This provides a significant buffer for local refineries and a boost to maintain and expand oil refining locally,” Patel said regarding a supply commitment estimated to be valued at R100 billion over the next five years.
Engen and Vivo Energy formally completed their merger on Tuesday after regulators approved the sale of Malaysia’s Petronas’ 74% stake in Engen to Vivo Energy in April. The combined Vivo Energy group now boasts over 3,900 service stations and more than 2 billion litres of storage capacity across 28 African markets. “Africa and South Africa have and will remain a key focus for Vitol’s investment,” said Harvey Foster, Vitol’s country manager.
