JSE-listed diversified industrial holding company KAP says that, in a dispute between polymer producer and KAP subsidiary Safripol and JSE-listed energy and chemicals company Sasol about an ethylene supply agreement, the dispute about the price of ethylene has now been determined in favour of Safripol with costs, and with KAP's interpretation of the pricing principles of the supply agreement being upheld by the arbitrator.

This is a significant development for Safripol, KAP says.

The price dispute has been finally disposed of in terms of the supply agreement, although Sasol may apply for a High Court review of the award.

The dispute relating to Sasol's volume commitment in terms of the supply agreement remains in progress, it adds.

Propylene and ethylene are the primary raw materials used in Safripol's manufacturing of polypropylene and high-density polyethylene. Sasol South Africa supplies propylene and ethylene to Safripol in terms of evergreen supply agreements, KAP says.

KAP and its legal advisers remain confident of its prospects in the various matters. Given the complex nature of these matters, it is anticipated that the relevant resolution processes will be lengthy. It will update shareholders of material developments when appropriate, the company says.

Further, Safripol had lodged a complaint against Sasol at the Competition Commission and requested it to investigate expeditiously whether Sasol's conduct, as the monopoly ethylene supplier in South Africa, is in contravention of the Competition Act. The commission's investigation is ongoing, KAP says.

Safripol also applied to the Competition Tribunal for interim relief under the Competition Act. The matter was heard before the tribunal and judgment remains outstanding.

SASOL REPLY
Sasol, meanwhile, has responded by saying the arbitration award handed down in the hardship dispute dealt with separate issues to the pricing hardship dispute.

The arbitrator’s decision was made in favour of Safripol, but the arbitrator did not engage with the pricing principles in the contract, the company said by email.

Sasol was considering the award and its options.

“Sasol confirms that the decision of the Tribunal on Safripol’s interim relief application has not yet been received and that there are multiple disputes ongoing between the parties in relation to the ethylene supply arrangements,” the company said.