Passionate Measurable Value CASE STUDY: Background Infrastructure to support technology

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1 CASE STUDY: Feasibility of using Gas as Transportation Fuel in South Africa Background With a global focus towards alternative energy sources to reduce pollutants and greenhouse gases, renewable energy sources show significant promise as an alternative transport fuel for fleets. Using natural gas and alternative fuels as energy source for mobility has been widely proven to be cost effective and more eco-friendly, there are currently >16.2 million vehicles globally operating on alternative fuel. In addition the evolution to alternative energy sources help us conserve the non-renewable energy sources like fossil fuels, which results in less consumption/ lower fuel prices which has been one element in the recent reduction of crude oil prices. (Supply/ Demand) South Africa has been slow in adopting alternative energy sources, but there is a renewed focus on using natural gas for mobility. Various South African companies and public sector entities has been working closely together to create a renewable energy strategy the infrastructure to support this initiative will be expanded exponentially in the near future. As of date there are less than 10 filling stations in South Africa that offer CNG or LPG re-fuelling facilities, and we strongly suspect the lack of infrastructure is one of the main reasons why most large corporates have not adopted the technology yet. Considering however that CNG and LPG offer substantially lower carbon emissions and a fuel saving in excess of 40% - we would urge corporates to keep focussing/ considering this technology. Infrastructure to support technology Current infrastructure comprises of mainly Sasol sites, but there is a firm commitment from the energy companies to expand this infrastructure in support of the strategy and volume commitments.

2 Refuelling stations In our view, there should be at least sites in central JHB/ Gauteng alone before it becomes feasible to operate a regional fleet on CNG/LPG. Indications are that this critical mass could be achieved in the next two years, as more companies convert/ demand increases the infrastructure should grow substantially. Case Study Ultimately, large corporates will be considering the financial implications first before they even consider the adoption of CNG and LPG. Prior to Eqstra Fleet Management formalising their strategy they completed tests on various technologies to prove the cost impact. The results were astounding and clearly proved the financial case for these technologies: Case Study 1: CNG vs Petrol Nissan Almera 1.6 Fuel Distance Travelled Litres Used Net Cost Per Litre Total Cost Petrol 3,000km 222 R12.61 R2, CNG 3,000km 192 R10.09 R1, Saving R Traveling with the vehicle over a distance of 3,000km there was a saving of 30.80% CNG vs. Petrol

3 Case Study 2: LPG vs Petrol Toyota Corolla 1.6 Fuel Distance Travelled Litres Used Net Cost Per Litre Total Cost Petrol 3,000km 222 R12.61 R2, LPG 3,000km 266 R10.09 R2, Saving R CNG: Traveling with the vehicle over a distance of 3,000km there will be a saving of about 4.13% LPG vs. Petrol. It is evident that there is a direct cost savings using CNG & LPG as a replacement for petrol and diesel, and with fuel costs now contributing in excess of 40% of total fleet expenditure savings of this magnitude could have a significant impact on fleet costs. Other Factors to Consider The decision on whether to adopt the CNG/LPG Technology does not only depend on cost and availability. The biggest other factor to consider is the impact this technology has on the vehicle and whether manufacturers will allow the use of alternative energy. Below are some of the factors that need to be considered when assessing CNG & LPG Gas: Advantages Disadvantages >40% more cost effective than petrol Slight Increase in engine wear and tear Abundant reserves of gas yet untapped 90% lower carbon monoxide emissions than petrol Decreased vehicles power delivery Increased methane emissions 25% Lower CO 2 emissions Reduced space in vehicle due to installation 40% lower NOx emissions CNG distribution infrastructure limited No fuel fraud risk Negotiations are underway with local manufacturers to address the above, as currently the use of CNG/LPG could invalidate warranties. We suspect based on the volume and commitment

4 LPG: from various role players that some of the local manufacturers will start supporting the initiative. Advantages Availability better than CNG Abundant reserves of gas yet untapped 75% lower carbon monoxide emissions than petrol Disadvantages Refined from petroleum, hence subject to higher pricing. Not suitable for high-speed runs, as power delivery reduces Needs decent storage space to reduce risk 85% Lower Hydrocarbon emissions 40% lower NOx emissions Better fuel efficiency Fuel fraud risk reduced Options Available Even though infrastructure is limited at the current moment, there as solutions available to assist your fleet should you decide to take this route: Sasol has also added LPG fuel pump at certain of their fuel stations. With time this would be more readily available. Mobile Filling Stations are available to corporates with a fleet size larger than 50 vehicles. There is a rental fee involved, however it will still be more cost-effective than petrol due to the savings derived from using LPG or CNG. The cost of a mobile filling unit for an average passenger vehicle is between R R Conclusion The price of petrol has shown an average increase of 13% Y-o-Y since Even with the recent price reductions, with fuel contributing >40% of your total fleet costs, this could be a solution to reduce cost. With the focus now on developing infrastructure, we believe regional companies in Gauteng will start adopting the CNG/LPG technology. With more than 16m vehicles globally already utilising the technology and with the support of large institutions we believe it would be a viable option for alternative energy resources as a transportation fuel.

5 All rights reserved. The information contained in this document is confidential and has been prepared by EQSTRA FLEET CONSULTING solely for information purposes to our strategic clients; it is not to be relied upon by any third party without our prior written consent. This report, whilst based on the most realistic information and proven statistical methodologies available to us at publication and is intended to provide general information. It is not an exhaustive treatment of the subjects raised. Accordingly, it should not be relied on to address specific situations or circumstances and is not a substitute for accounting, tax, legal, or other professional advice. Before making any decision or taking or refraining from any action which might affect your finances or business affairs, or those of your employees, you should consult a qualified professional adviser to validate. Eqstra Fleet Consulting address: info@efm.co.za Physical address: 12 Corobrik Road, Meadowdale, Johannesburg, South Africa