To pay off debt, Sasol agreed to sell a 30% stake in a natural gas pipeline connecting Mozambique and South Africa for as much as R5.1 billion ($361 million).

The transaction completes an accelerated asset-sale program that has allowed Sasol to reduce debts that have ballooned due to cost overruns at a major US chemicals project and cancel a planned $2 billion share sale. Last year, the company began looking for a buyer for its pipeline shares as it looked for ways to shore up its finances in the face of mounting creditor pressure.

Sasol will sell part of its stake in the Rompco pipeline to a group of buyers including a unit of South African financial-services firm Old Mutual Ltd., it said in a statement Friday. The fuel and chemicals maker will retain a 20% holding and continue to operate and maintain the 865-kilometre (540-mile) link.

The Rompco line – short for Republic of Mozambique Pipeline Investment Co. – currently transports gas from the Pande and Temane fields in Mozambique to Sasol’s operations in South Africa. Once those resources are depleted, it could be a potential route to market for liquefied natural gas arriving at the planned Maputo terminal.

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The sale comprises an initial amount of R4.1bn and a deferred payment of as much as R1 billion “if certain agreed milestones are achieved” by the end of June 2024, Sasol said. The deal is expected to become effective during the second half of this year.

The buying consortium includes Reatile Group, a Black-owned South African investment company focused on energy and petrochemicals, along with the IDEAS Fund, an infrastructure equity fund managed by African Infrastructure Investment Managers Ltd., which is a subsidiary of Old Mutual.

Old Mutual was cited as a frontrunner for the stake back in October, as was France’s Total SE, with the suggestion being that Sasol would divest its entire 50% interest.

The South African and Mozambican governments each own 25% of the Rompco line through state-owned companies. The proposed transaction is subject to the waiver or exercise of pre-emptive rights by the shareholders.

“New sources of gas supply transported through the Rompco pipeline could be key” to relieving pressure on South Africa’s power utility Eskom Holdings SOC Ltd. by replacing ageing coal plants that generate most of the nation’s electricity, the consortium said in a separate statement.

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