Sale of BP Zambia Limited Press Release

The ZPA is pleased to announce the sale of Government's 25% shareholding in BP Zambia Limited (BP) to BP Africa, the class B & class Z shareholders of the company following the successful completion of negotiations.

The Minister of Finance Hon. R.D.S. Penza has signed the sales agreement after receiving clearance from the Attorney General. The sale will achieve one of the ZPA's prime objectives, that of increasing investment in the country.

The deal was negotiated by Mr. Norman Mbazima as team chairman. The BP Africa team was led by Mr. Roger Griffiths, Managing Director of BP Zambia. The negotiators relied on the independent valuation conducted by Deloitte and Touche.

BP Zambia was incorporated on 28 January, 1967 with a head office in Lusaka and a blending plant for lubricants in Kitwe. BP Zambia has five depots for distribution and 70 service stations in various parts of the country. Its major business is to distribute, export, import and deal in petroleum and petroleum products of all descriptions.

The ZPA Board gave a negotiation mandate to the BP negotiation team aimed at ensuring that the company was sold in accordance with the Articles of Association. The Articles provided for BP Africa to exercise their rights of preemption over the Government shares in BP Zambia. The team was mandated to make a sale at a price to be determined by independent valuers.

25% of shares in BP Zambia held by the Government were offered to BP Zambia in August 1995. Following extensive negotiations BP Africa agreed to the price demanded for the shares by the Zambia Privatisation Agency.

BP Africa belongs to the BP group of companies owned by British Petroleum Company plc, one of the world's largest oil and petrochemical groups. BP Africa is committed to investment in Africa and has shown confidence in Southern Africa's potential by investing in all countries in the region. Their acquisition of extra shareholding in BP Zambia is a further testament to their confidence in the region and in Zambia.

Government shares in BP Zambia were sold for a price consideration of US $3,300,000 of which US $330,000 has already been paid as deposit. BP Africa plans to increase the business activity of BP in Zambia over the next five years.

They have also agreed to allow the Zambia Privatisation Agency to float 25% shares to the public in the near future. This will help achieve another of ZPA's objectives; to provide for wide share ownership which will help to improve earnings of the Zambians.

Benefits for Zambia
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The transaction consummated with BP Africa will in the long term lead to the realization of the following benefits for Zambia:

Increased tax revenues for the treasury.

Increased investment in the industry. BP Africa has committed to invest at least an average of US $1.5 million annually as capital expenditure over the next five years.

BP Africa has agreed to retain all employees on existing conditions of service.

Employees of BP Zambia will be allowed to join the BP Plc Share Ownership scheme within two years of completing the sale of shares to BP Africa. BP Africa has agreed to waive their rights over the remaining 25% shares to allow for public participation in the company.

ZPA Board Objectives

The ZPA Board had set the following objectives to be achieved in the privatisation of the oil sector:

To promote broad based Zambian participation in the ownership of shares in the oil industry by reserving shares for public flotation on the Lusaka Stock Exchange.

To obtain a reasonable price given the valuation obtained from Deloitte & Touche.

To minimise Government involvement in enterprise operations.

The ZPA is pleased with the increasing level of confidence being shown by local and international companies in the future of Zambia and hope this will go a long way in rejuvenating the growth of the economy of Zambia.

Privatisation is leading the investment surge and the ZPA is hopeful that this transaction will attract even more investment in Zambia.

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