LIQUID FUELS CHARTER

LIQUID FUELS CHARTER

Sasol is an international integrated chemicals and energy company. Through our talented people, we use selected technologies to safely and sustainably source, produce and market chemical and energy products competitively to create superior value for our customers, shareholders and other stakeholders.

Liquid Fuels Charter The South African Petroleum and Liquid Fuels Industry stakeholders signed the Liquid Fuels Charter (the Charter) to provide a framework for driving the empowerment of historically disadvantaged South Africans in the liquid fuels industry in November 2000. The South African Petroleum Industry Association (SAPIA) Transformation Committee and the Ministerial Compliance Committee have been established by the Department of Energy to monitor, support and report on progress of the Charter. All oil companies are represented in these committees. The signatories of the Charter, including Sasol Oil, committed to facilitate empowerment in the industry by delivering targets as outlined on the following pages. However, with the release of the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Practice, later amended in 2013, there have been various conflicts experienced between the B-BBEE Codes and the Liquid Fuels Charter as well as many other pieces of empowerment legislation impacting on interpretation and implementation. The Departments of Energy and Trade and Industry have embarked on a process to align the Liquid Fuels Charter with the B-BBEE Codes to eliminate conflict between the two. June 2016 Liquid Fuels Charter 1

Following is a summary of Sasol Oil s progress towards meeting the Liquid Fuels Charter s (the Charter) objectives and targets: 1. OWNERSHIP The Charter requires that historically disadvantaged South Africans (HDSA) own, in total, 25% of the aggregate value of the equity of the entity that holds the operating assets in the South African Oil Industry. Sasol Oil has fully complied with the ownership element. Effective 1 July 2006, Sasol Oil sold 25% of its shares to Tshwarisano LFB (Pty) Ltd, a B-BBEE consortium comprising 150 000 direct shareholders and 2,8 million beneficiaries. The value of this transaction amounted to R1,450 billion, making it the biggest B-BBEE transaction in the liquid fuels industry. The demographics of this empowerment group include 54% women ownership, substantial rural representation, 3% youth and 2% disabled. In structuring this empowerment transaction, it was ensured that all aspects of the Charter were adhered to including participation of Tshwarisano throughout Sasol Oil s value chain. In addition, Tshwarisano holds the acquired 25% ownership of Sasol Oil without any limitations on its ability to exercise rights and obligations that accrue under such ownership. Tshwarisano has the right to appoint three non-executive directors to the Sasol Oil Board of Directors (the Board), Sasol Limited has the right to appoint six non-executive directors and Sasol Oil has the right to appoint three executive directors. In terms of the Sasol Oil Shareholders Agreement, each director has one vote; hence Tshwarisano has 25% of the voting rights subject to veto rights granted to shareholders in respect of certain shareholder reserved matters. Tshwarisano also has rights, as a shareholder, to approve or agree to shareholder reserved matters. Consequently, Tshwarisano is participating in the sourcing of crude and fuels components, refining and blending, in-bound logistics and retailing and direct sales to end users. 2. MANAGEMENT CONTROL Sasol Oil B-BBEE partners who are 100% black, fully own and control Tshwarisano, which in turn has an effective 25% shareholding throughout Sasol Oil s value chain. Tshwarisano has appointed three directors to Sasol Oil s Board of Directors with full voting rights. To ensure that effective control by historically disadvantaged South Africans (HDSA) is maintained, the Sasol Oil Board of Directors has to date transformed from zero black representation to 75% and 33,33% women board members. In terms of control, Sasol Oil is fully compliant with the Charter from both the perspective of black representation and voting rights as well as operational involvement of HDSA. 3. SUPPORTIVE CULTURE Various interventions have been implemented to ensure that an enabling empowerment environment is created within Sasol Oil. B-BBEE targets are monitored and pursued as part of Sasol Oil s overall Balanced Scorecard. B-BBEE Working Group Committee meetings, including all business units are held on a monthly basis to monitor progress against transformation targets and also provide an oversight role in governance and implementation of transformation initiatives. Additionally we have a combined Enterprise Development (ED) and a Supplier Development (SD) forum which has identified barriers to transformation and has developed transformation action measures. They will continue to review, monitor progress and make recommendations to the Sasol Oil s Executive Committee on ED and SD issues. Liquid Fuel Charter compliance is one of the key business imperatives for Sasol Oil as it is one of the key criteria used by the Department of Energy (DoE) in awarding retail and site licences, which are critical to the execution of Sasol Oil s strategy. All debt related to the transaction was settled a year in advance of the agreed term. 2 Liquid Fuels Charter

4. SUSTAINABILITY Sasol Oil played a pivotal role in the establishment of Exel Petroleum in 1997, which operated successfully as a liquid fuels marketing company up to 2004 when it was merged with Sasol Oil. The merger was informed by the realisation that Exel s operations would be exposed when the industry is deregulated, hence Exel s shareholders comprise more than 40% of the Tshwarisano Consortium. Today, Tshwarisano, which includes former Exel s shareholders, owns 25% equity in all parts of Sasol Oil s value chain. This has enhanced its sustainability by cushioning them from the vulnerability of being exposed to only volatile parts of the business. Tshwarisano has in addition used all its dividends to pay a substantial amount of its debt enabling it to meet its 10-year commitment to settle its debt. 5. EMPLOYMENT EQUITY Sasol Oil s diversity for all designated groups (Africans, Coloureds, Indians and White females) was 87 % as at June 2017. For junior management and above, diversity was at 72%. Diversity at middle management and higher was at 70% of which (59%) are African. 6. CAPACITY BUILDING Sasol Oil s capacity building focus is strongly aligned with business priorities and remains on leadership development, critical operational, technical and safety related training. As at 30 June 2017, out of a total training spend of R29 797 789,11 the company has spent R21 325 231,06 (71,5%) on HDSA employees. 72% of this was spent on African, 7,5% on Coloured and 19% on Indian employees. Eight unemployed learners with disabilities have been enrolled for a NQF 2 Business Administration learnership which commenced on 1 June 2017. The programme runs until 31 May 2018 and opportunities for permanent employment will be sought on completion of the programme. Sasol Oil operational sites have been SETA accredited for workplace learnership programmes. This will enable the registration of operational employees for NQF qualifications, learnerships, greatly improving opportunities for career path progression. Due to cost cutting as a result of a lower-for-longer crude oil price outlook, skills development spends has been reduced. Skills development and training interventions have now been directed to on-the-job training, coaching and mentoring. Diversity at the executive level is at 63%, with 25% female representation. At senior management, the focus remains on African and Coloured females. At middle management, a special focus will be on the African female category. People with disabilities represent 1% and continue to be a focus area across all levels. Liquid Fuels Charter 3

7. HDSA COMPANIES Sasol Oil actively supports emerging black-owned liquid fuel wholesaling companies with favourable credit terms in combination with coaching and mentoring. 8. PROCUREMENT Good progress is being made in this area out of the total controllable spend from July 2016 to June 2017, R825 million was spent with black-owned suppliers, excluding crude oil, inter-company transactions and purchases from state-owned suppliers. Opportunities to increase spend with black-owned suppliers continue to be explored. This includes progressive target setting in different procurement categories to increase spend with HDSA suppliers and specifically black woman-owned suppliers. is being made in the challenging area of crude oil and product procurement. As at the end of June 2017, 41% of total crude oil procurement as well as 74% of spot crude oil was sourced from black-owned suppliers. 9. SYNFUELS SUPPLY AND WHOLESALING Sasol Oil enables black-owned liquid fuels wholesalers to purchase on an ex-refinery basis. In the past, only oil companies who owned refineries bought on a wholesale basis. After signing the Liquid Fuels Charter, Sasol Oil provided access and opportunity for emerging black-owned companies to purchase on the same basis as established companies. This intervention has provided many of the so called non-refinery wholesalers an opportunity to compete on a more equitable basis. 10. REFINING CAPACITY This element envisages that oil companies should sell shares in their refineries to HDSA as well as making refining capacity available to them and offering opportunities for joint ventures for expanding or upgrading refineries. Sasol Oil fully complies with the ownership element opportunities across its entire value chain, including refining facilities by virtue of Tshwarisano s shareholding in the entire Sasol Oil corporate structure. Tshwarisano owns 25% of Sasol Oil s share in the Natref refinery which produces 12% of the total South African petroleum demand. In addition, Tshwarisano owns 25% of Sasol Oil Secunda Operations where fuel components purchased from Sasol Synfuels are blended for marketing. Therefore, Tshwarisano is fully involved in the manufacturing and refining of all Sasol Oil s products. In order to meet its own marketing and contractual obligations, the company s production has to be supplemented by imports. HDSA suppliers are also afforded the opportunity to supply Sasol when importing petroleum products. 11. RETAILING This element envisages that oil companies should create fair opportunity for entry to the retail network and commercial sectors by HDSA companies. Out of Sasol Oil s retail network of franchised Sasol Convenience Centres (SCC), Exel Service Stations and dealer owned sites, 53% are operated by historically disadvantaged individuals and 14% by women-owned dealers. In terms of the new programme of targeting African and Coloured dealers, 100% of the new sites are allocated to African and Coloured dealers and, preference is given to African and Coloured women-owned. Sasol Oil currently has 397 retail outlets. Further initiatives to increase the participation, in particular, of African and Coloured women are being investigated, including setting up a fund to assist with equity contribution. 4 Liquid Fuels Charter

12. ENTERPRISE DEVELOPMENT In terms of this element, the oil companies are also required to create fair opportunity and support emerging HDSA enterprises. Sasol Oil contributes significantly to the Sasol Group budget for enterprise and supplier development. From July 2016 to June 2017, R7,8 million was spent on developing current and potential HDSA suppliers to enable them to better service Sasol and improve their technical and business capabilities. R100, 1 million loan financing was disbursed to HDSA suppliers to enable them to purchase the necessary equipment required to execute their contracts and for general running costs. Specific initiatives to develop more HDSA suppliers in the areas of forecourt maintenance as well HVAC (heating, ventilating, and air-conditioning) work have been initiated. 13. SOCIO-ECONOMIC DEVELOPMENT (SED) Sasol Oil Social welfare and the development of citizens are encapsulated in the programmes of national development in the respective host nations in which we operate. These programmes include policies that promote the social advancement in the following areas: Education Implementation of projects that are designed to improve student literacy levels and the understanding of mathematics and science. Supporting rural and urban educational infrastructure and development in communities surrounding the Sasol Retail sites, Sasol Energy operations, and the Integrated Energy Centres (IeCs). Environment Supporting environmental programmes with a focus on mitigating the impact of climate change on communities through water, recycling and waste management programmes. Employee volunteerism Encouragement of employees to support the implementation of Corporate Social Responsibility (CSR) programmes. In South Africa, Sasol Social Investment programmes play a fundamental role in creating affinity among customers to Sasol s product offering and the Sasol corporate brand. INTEGRATED ENERGY CENTERS (IeC s) Sasol has partnered with the Department of Energy (DoE) in setting up IeCs in rural areas. Through the construction of these IeCs, Sasol is bringing affordable and sustainable energy services to rural communities. The IeC programme is geared towards alleviating the poverty conditions in the rural South Africa to proving energy access to communities in rural South Africa and primarily the poverty nodes identified in the various in provinces. The IeC s were identified as delivery vehicles for the implementation of this programme and as a mechanism of the Department of Energy s contribution to Integrated Sustainable Rural Development Strategy (ISRDS). Sites established to date are: Caba Mdeni in Eastern Cape; Ratlou in North West Province; Qunu in Eastern Cape; Moshaweng in Northern Cape; Ulundi in KwaZulu-Natal; Makwana in Free State; and Mangweni Village in Mpumalanga under construction. Implement programmes aimed at increasing opportunity for employment with a special focus on youth and supporting learnership and skills development programmes. This approach further demonstrates Sasol s commitment to social development as a partner in nation development and supports our efforts to respond to stakeholder needs. Liquid Fuels Charter 5

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