Sasol Gas, recently alleged by the Competition Commission to have overcharged prices for years, does not agree with an initial conclusion by the National Energy Regulator of South Africa (Nersa) that the maximum price of R120/GJ that the company had applied for, for the 2023 year, is excessive.
Nersa has published Sasol Gas’s Amendment Maximum Gas Price (MGP) application for the period July 1, 2022 to June 30, 2023 (FY2023).
It also published Sasol Gas’s MGP application for July 1, 2023 to June 30, 2024 (FY2024). The pricing application follows the methodology that Nersa published in February 2023.
Two weeks ago, the Competition Commission referred a complaint against Sasol for excessive pricing of natural piped gas to the Competition Tribunal, after the Commission found Sasol Gas had contravened the Competition Act and extracted mark-ups of up to 72% on the product, with excessive pricing having continued for almost a decade to date.
Sasol said on Friday it had so far this year continued to charge customers at R68.39/GJ from FY2022, even though expenditure and cost increases that Sasol had faced during this period had exceeded 40%.
The group had also since 2021 invested more than $300 million (R5.3 billion) to maintain gas supply from Mozambique.
However, during 2022, Sasol said it became apparent the MGP would increase dramatically, due to international gas hub prices increasing due to post Covid-19 demand, the war in Ukraine and weather conditions affecting gas demand.
These factors were projected to increase the MGP, determined according to the international gas benchmark 2020 MGP methodology, to R273.43/GJ for FY2023.
“Sasol Gas maintains that apart from operational cost increases, Nersa also has to take into account the risk associated with extensive investments, which Sasol is making to extend supply and the incentives to develop new resources.
Furthermore, the alternative value for Sasol is that it has the ability to convert gas into other value-added products in its South African facilities, it said in a statement.
Sasol said it trusts “Nersa will fulfil its mandate to determine an appropriate, reasonable and competitive gas price for FY23 in the interests of consumers and gas supply in South Africa,” and it would continue to engage with Nersa on the price application.
“A MGP needs to be fair and enable ongoing investment in new sources of gas supply. Sasol Gas engaged extensively with Nersa about appropriate pricing in accordance with the then applicable 2020 MGP methodology. These engagements continued throughout 2022 and resulted in Nersa requiring Sasol to bring a formal price application to resolve the matter,” it said in a statement.
It said gas price regulation should determine a competitive price for gas and should strike a balance between the interests of gas suppliers and consumers, while fostering the viability of the supply in South Africa and investment in new sources.
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