SIKONATHI MANTSHANTSHA: Sasol’s bad chemistry
Ballooning project costs are best left to those entities still under the burden of control by politicians who have priorities other than providing steady returns to investors
It is almost impossible to direct legitimate criticism at a management team that has presided over 18% growth in core earnings and a similar growth rate in dividend payouts. But Sasol has again informed investors of further cost overruns at its Lake Charles Chemicals Project (LCCP) in Louisiana. The latest update is that the LCCP, which converts natural gas into vehicle fuel and other chemical products, will now cost up to $11.8bn. The initial cost at the final investment decision stage was given as $8.9bn. "Beneficial operation" was to be achieved last year. Instead the plant only started production from one of seven units, the linear low-density polyethylene unit, two weeks ago. The only attempt at explanation for the delay was this from joint CEO Stephen Cornell: "While the LCCP fundamentals remain firmly intact, we acknowledge the disappointing cost and schedule overrun. The project was [affected] by several challenges, within and beyond our control, in the fourth quarter of the...
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