A token sum, also known as peppercorn, is a symbolic but important part of a contract showing that ‘some consideration’ has been paid. The amount is not important, as long as it shows that something has been handed over in payment.
Elsewhere in the world, peppercorn is also used when one party in the contract wishes to conceal the nature of the payment. Thus, a contract may reflect the sum of “one rand and other good and valuable consideration”. The one rand is the peppercorn that represents the concrete consideration and ensures that the contract is valid, while the actual amount paid is hidden and referred to only as the “other good and valuable consideration”.
I vividly remember the breaking news of November 4, 1997, which made quite an impact on me at the time. I remember being fascinated by the news story headlined ‘Shoprite snaps up OK for R1’, which appeared in the Mail & Guardian. The strapline read: “Shoprite Holdings has bought the OK Bazaars Group from South African Breweries (SAB) for the nominal sum of R1. The loss-making group had cost SAB an estimated R1-billion in capital injection since its delisting in March 1994.”
It continued: “The deal includes a guarantee of R540-million in assets and loan accounts as of November 1, the transaction date.”
The ‘Brand Overview’ on Shoprite Holdings’ website states: “In 1997, Shoprite acquired OK Bazaars from SAB in the legendary R1 deal.” That was 70 years after Michael Miller and Sam Cohen had opened OK Bazaars.
Fast forward to 2024. According to www.inflationtool.com, R1 in 1997 is equivalent to R4.03 today, taking into account compound inflation and Consumer Price Index (CPI). If you are mathematically inclined, the calculation is Value Today = Value in 1997 × CPI Today/CPI 1997 = R 1 × 156.39/38.82 ≈ R4.03.
On May 25, news broke that the Department of Mineral Resources and Energy (DMRE) had announced that the Central Energy Fund (CEF), a Schedule 2 State-owned company which is a diversified energy entity that reports to the DMRE, had acquired land and assets at South Africa’s largest refinery, which had been out of operation for the past two years. (Schedule 2 business enterprises are required to generate revenue to fund their operations. Some depend on government support in the form of guarantees or subsidies.)
According to the CEF’s website, its mandate is to contribute to energy supply security in South Africa and the region through exploration, acquisition, development, marketing and strategic partnerships. This mandate derives from the CEF Act, 1977, and subsequent Ministerial directives.
The CEF was established in the 1950s and has played a central role in ensuring South Africa’s energy supply security, making a significant contribution to the country’s economy and being a strategic partner to the DMRE through the provision of insights that assist in policy development and regulation.
Wholly owned subsidiaries operating under the CEF are African Exploration, Mining & Finance Corporation, which mines coal in Mpumalanga for supply to Eskom; the South African Gas Development Company, also known as iGAS, which is a shareholder in the Mozambique-to-South Africa gas pipeline and is involved in the development of other gas delivery projects; Petroleum Agency South Africa, which is the national petroleum and gas promotion and licensing agency; the Petroleum, Oil and Gas Corporation of South Africa, or PetroSA, which is the largest subsidiary in the group and operates a gas-to-liquids refinery that uses indigenous gas as feedstock; and the Strategic Fuel Fund Association, which manages strategic crude oil infrastructure and strategic crude oil stocks, and provides oil pollution control services in Saldanha Bay.
The CEF will buy the Durban-based Sapref refinery, the largest crude oil refinery in the country, boasting 35% of South Africa’s refining capacity, from bp Southern Africa and Shell Downstream South Africa for R1. The sale excludes the Island View Terminal Operations and the lubricants blending and grease manufacturer, Blendcor, based in Island View. The proposed purchase will now be subject to regulatory approvals.