1. 1 Transformation in the Petroleum Industry – The Journey Presentation to the Parliamentary Portfolio Committee for Minerals and Energy 10 MAY 2007 Prepared by: SAPIA

2. 2 Objectives of the Session Update Portfolio Committee on achievements by Petroleum Industry on Transformation Liquid Fuels Charter used for the self evaluation Evaluation done at Industry Level Identify Gaps and Way Forward

3. 3 The aim of the Liquid Fuels Charter is to ensure that there is sustainable presence, ownership and control by Historically Disadvantaged South Africans of approximately 25% in all facets of the Liquid Fuels Industry by 2010 Regulatory objective Effective ownership of Enterprises by Black people Encourages the sharing of equity and voting rights with black people and black women LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Development of competencies of Black employees Encourages companies to develop black talent through spending on skills development, overseas placement and learnerships Procurement of Goods and Services from strong B-BBEE recognition level suppliers Encourages to procure from BEE compliant companies. Encourages spend on Small and Micro- enterprises, >50% Black owned companies and >30% Black Women owned companies. Assist and accelerate the development and sustainability of other enterprises Encourages development or expansion of black small, medium enterprises particularly along the value chain. Promote access to the economy for Black people Encourages initiatives intended to directly provide black people who are natural persons with means of generating income for themselves Equity in the workplace Encourages companies to identify and recruit black people at professional, middle and lower management positions Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Effective control of Enterprises by Black people Encourages senior black decision making at Executive Board and Senior Top management levels

4. 4 Most of the Oil companies have signed equity deals with Broad Based Economic Empowerment groupings. Ownership Target – 25% by 2010 Ownership deals signed by all Major Oil companies Average Industry ownership owned by BEE companies 22% Negotiations to extend ownership deals to 25% ongoing All on-track to achieve minimum 25% ownership by BEE companies across the value chain LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Ownership

5. 5 Significant Improvements have been achieved in Management and Control LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Management Control Management and Control Target – 25% by 2010 Sapia Director - Black SAPIA Board of Governors are now 71% Black Black Representation in Oil Company Boards is appox 53% Women representation in the Boards approx 20% Executive Black representation in Oil Company Boards 40% Executive Black Management representation 50%

6. 6 Black representation in staff complement of Oil companies has significantly improved Employment Equity – 25% by 2010 –Black Staff complement in all Oil companies is approximately 63% LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Employment Equity

7. 7 Industry needs to improve women representation at all levels of the organization Employment Equity Woman –Woman account for only 24% of staff complement, 20% board representation LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Employment Equity

8. 8 Many interventions have been implemented and developed to develop Staff within the Oil Industry LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Skills Development R70mil is spent by Industry on Black Skills Development Leadership in Oil and Energy Program with special focus on Woman(50 delegates) Learnerships Programs (1000 students in 2007) Artisan Training in SA - R145mil/annum Functional Training Business Management Supervisory Skills Loss prevention systems to improve safety

9. 9 Local Preferential Procurement has exceeded the Oil Industry Charter target of 25%. LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Preferential Procurement BEE Procurement – 25% by 2010 Current Industry BEE procurement of goods and services Exceeds 50%(approx R6.5 bil) EE Procurement Policy in place Monitor BEE spend on a monthly basis All suppliers evaluated using Industry standard Crude procurement from BEE companies is happening but current level are far from target – this is receiving urgent attention SASDA created in order to improve supplier development within the Industry

10. 10 The creation of supplier Agency SASDA has not delivered expected results LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Preferential Procurement Supplier Development Industry Committed to Supplier Development Industry spends approx R5mil a year on SASDA Staff has been seconded to SASDA from Oil companies SASDA developed Industry Database- some enhancements still need to be implemented Conflicting strategic direction between DME an Industry led to SASDA non delivery This needs to be resolved in order to ensure that suppliers are developed

11. 11 Several Emerging Black Small business companies have received support from Oil Companies LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Enterprise Development Africa Oil, Investment, Infrastructure support, Masana Petroleum, infrastructure support, capacity building and business support Mzantsi Logistics, financial, capacity building and training Siyaka Trust Highveld Ridge Business Development Integrated Energy Centres, financial,business and training support Black representation in Retail Network approximately 40%, programs in place to improve this

12. 12 Our Corporate Social Investment aims at sustainable development initiatives as envisaged by the Liquid Fuels Charter LFC scorecard Direct empowerment Human Resource Development Indirect empowerment Ownership Management Control Preferential Procurement Enterprise Development Employment Equity Skills Development Socio-Economic Development Corporate Social Investment More than R100mil invested by Industry in 2007 Education – Especially Maths and Science Job creation Social development Health - AIDS Environment Road Safety program

13. 13 In summary, our current assessment is that Industry is on track towards achieving the Liquid Fuels Charter 2010 aspirations WAY FORWARD Increase Black and women representation in senior and professional levels Direct skills spend to core and critical skills and women development Ensure that Black suppliers are developed Continue to increase the number of Black representation in Retail network