Major service station franchise Shell is reportedly planning to exit South Africa.
City Press and Sunday Times report that Shell is looking to divest its 72% ownership in Shell Downstream South Africa after operating in the country for over 120 years as a result of a dispute between the oil giant and its long-term BEE partner, Thebe Investment Corporation (TIC).
In 2022, TIC revealed its intention to cash out its 28% stake in Shell Downstream South Africa and reinvest the funds into growing the company.
TIC submitted a written request to implement an “opt-out” clause in its contract with a proposed valuation of $200 million (R3.7 billion) for its stake, based on figures provided by Shell.
However, the petrol supplier allegedly did not respond to TIC’s request for eight months and when it did, it claimed that the numbers were incorrect and Thebe’s portion of Shell Downstream South Africa was worth far less.
TIC shareholders were taken aback by these claims and said they believe Shell deliberately delayed responding to orchestrate its exit from South Africa, according to City Press.
Shell declines to comment
Shell declined to comment on its rumoured exit from the domestic market, instead labeling it as speculation.
“As a matter of policy and principle, Shell Downstream South Africa distances itself from speculation or rumours, particularly in relation to confidential shareholder agreements and relationships. Out of respect for our partners and these agreements, we’re unable to provide any further comment currently,” the company said.
“As a responsible company, we take our communication and stakeholder engagement commitments very seriously and will always proactively communicate through the appropriate channels and forums, as and when required to do so.”
Should the company leave South Africa it would indeed be a blow to the economy.
Shell currently operates over 600 service stations nationwide and enjoys oil and gas exploration rights given to it by the Department of Mineral Resources and Energy.
It would be the second vote of no confidence in South Africa following the shutdown of the Shell-owned Sapref refinery in March 2022 which forced the country to increase its reliance on imported fuels.
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