Power, rail outages cloud outlook for South Africa fuel producer

Sasol Ltd. said incessant power blackouts in South Africa coupled with rail and port bottlenecks are making it difficulty for the nation’s biggest fuel producer to provide an accurate volume outlook.

Sasol, which also produces coal and chemicals, has struggled to move the commodities because of derailments and vandalism on freight trains managed by Transnet SOC Ltd., while dealing with erratic power supply by state-run utility Eskom Holdings SOC Ltd. That adds to the variables in Sasol’s forecasting models.

“Further pricing and demand volatility is expected” for the rest of the financial year ending June 30, Sasol said in a filing on Tuesday. “The volatile global macro-economic environment and the potential for ongoing disruption from Eskom and Transnet” impacts Sasol’s ability to provide accurate volume forecasts, according to the statement. 

A strike at Transnet’s operations and rail-car shortages hit Sasol’s chemical business in the six months through December. Mining-export sales were 25% lower compared to the same period a year earlier for reasons including “ongoing operational challenges” experienced by freight trains.