Left Menu
Development News Edition

Depression in shares after Sasol ramps up cost estimate for US plant by $1bln

Devdiscourse News Desk | Pretoria | Updated: 22-05-2019 22:50 IST | Created: 22-05-2019 22:50 IST
Depression in shares after Sasol ramps up cost estimate for US plant by $1bln
Sasol said in February that the project would probably cost between USD 11.6 billion and USD 11.8 billion. Image Credit: Wikipedia

Sasol experiences a dip in its shares of 14.7 percent to R367.83 on May 22 after the planet's biggest maker of fuel from coal announced that it will rise the expected cost of its US ethane cracker project by about USD 1.1 billion (R15.9 billion).

Today's slump in Sasol's share is the highest in the last two decades after its announcement. The estimate for the Lake Charles Chemicals Project (LCCP), which will convert natural gas into plastics ingredient ethylene, is now USD 12.6-12.9 billion, including a contingency of USD 300 million, Sasol said in a stock exchange announcement.

Sasol said in February that the project would probably cost between USD 11.6 billion and USD 11.8 billion. However, during the launch of project in 2011, the cost was estimated to be between USD 3.5 billion and USD 4.5 billion.

The company said the review of the project, which was initially expected to cost $8.9 billion in 2014, revealed oversights such as duplicate credits and overlooked contracts, adjustments for potential insurance claims, procurement back-charges and remaining work and repairs that needed to be done.

"We are extremely disappointed with the increase in LCCP's capital costs. We take accountability and we are confident that the revised plan will be delivered," said joint president and chief executive officer Bongani Nqwababa on a conference call, Reuters reported.

Shares in Sasol, the world's biggest maker of motor fuel from coal, were down 12.5 percent to 377.45 rand at 0753 GMT. "The numbers just don't look very flattering at all," said Ryan Woods, market trader at Independent Securities.

Sasol also cut the forecast return from the project to 6-6.5 percent from 7.5 percent due to the increased cost as well as the outlook for market prices. It reduced the project's expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2022 financial year to USD 1 billion from USD 1.3 billion.

Also Read: Plan on Tanzania's $10bn Bagamoyo megaport stalls on infrastructural investment terms



Why COVID-19 is unstoppable in USA despite it being ranked at the top of GHS Index?

Several worst-hit countries such as Italy, France, Spain, the UK, Canada, and Russia have peaked COVID-19 cases in April. Almost all of them have gradually flattened the curve. However, the USA is setting new daily records of infections tha...

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...


Latest News

Australia's Victoria state marks week of triple-digit coronavirus cases

Australias Victoria state reported 273 new cases of the coronavirus and another COVID-19 death on Sunday, marking a week of triple-digit increases in infections, as state authorities battle fresh outbreaks of the pandemic.Melbourne, the cap...

Man dies by suicide in Visakhapatnam after losing money in online gambling

A man of Kotturu village in Anakapalle mandal in Visakhapatnam has allegedly died by suicide after losing money in online gambling. According to his friends, 24-years-old Doddi Venkata Aravind died after losing money in online gambling. How...

Indore reports 84 new COVID-19 cases

Indore on Saturday reported 84 new COVID-19 cases taking the total number in the city to 5,260, said Office of Chief Medical Officer CMO in a bulletin. As per the bulletin, a total of 25 persons have been discharged on Saturday taking the t...

Ghazipur: Arms license of Mukhtar Ansari's four aides suspended

As part of an action against top gangsters in Ghazipur district, the Uttar Pradesh police has suspended arms licenses of four aides of Mukhtar Ansari. In an action against mafia and top criminals here, the arms licenses of aides of Mukhtar ...

Give Feedback