South Africa and Mozambique exercised their pre-emptive rights to increase stakes in Sasol Ltd.’s Rompco gas pipeline, which runs between the countries, displacing an earlier deal.
South Africa’s iGas and Mozambique’s Companhia Mocambicana de Gasoduto, or CMG, plan to acquire a 30% share of the line valued at 4.1 billion rand ($290 million), according to a statement on Sunday. Sasol had agreed in May to sell the stake to a group including a unit of financial services firm Old Mutual Ltd. in a transaction that was subject to the waiver or exercise of pre-emptive rights by the shareholders.
“A greater participation in this asset will be an important step” in the cooperation between the nations around energy, “as well as bolstering the region’s transition to a low-carbon economy,” Ayanda Noah, chairperson of the Central Energy Fund that manages iGas, said in the statement.
South Africa is dependent on coal to generate most of its electricity and ranks as the world’s 12th-biggest producer of greenhouse gases. The nation’s energy plans include the procurement of power from sources including renewable technologies and natural gas.
Sasol has owned 50% of the 865-kilometer (540-mile) Rompco pipeline that transports the fuel from deposits in Mozambique to its operations in South Africa. The sale began last year as the chemical and fuel maker accelerated asset sales to pay down debt. The company didn’t immediately respond to questions sent outside of normal business hours.
State subsidiaries iGas and CMG have each held a 25% stake that will increase to 40% upon conclusion of the deal, with Sasol holding the remaining 20%.
“The transaction will be fully funded from past and future dividends generated by Rompco itself,” according to the statement.