The trial of Sasol Gas on charges of excessive pricing of natural gas

The trial of Sasol Gas on charges of excessive pricing of natural gas

The Competition Commission has accused Sasol Gas of violating competition law through excessive pricing of natural gas. The JSE-listed company is the only supplier of natural gas pipelines in South Africa, and this type of monopoly often warrants scrutiny.

“The commission found that Sasol Gas extracted gains of up to 72%. Excessive pricing has been going on for nearly a decade and is continuing,” the commission said in a statement.

“This claim stems from three complaints against Sasol Gas which were filed, in early 2022, with the Commission, by Egoli Gas (Pty) Ltd (Egoli Gas), the Industrial Gas Users Association of South Africa (IGUA-SA), and Spring Lights Gas (Pty) Ltd (Spring Lights).The Complainants alleged, among other things, that Sasol Gas engaged in excessive pipelined natural gas pricing in contravention of competition law.”

Sasol sources natural gas from the Pande and Temane gas fields in Mozambique and the commodity is transported from there to the company’s Secunda facility in Mpumalanga.

The committee said that it “relied on publicly available information to assess the prices charged by Sasol Gas to the Complainants for the costs of supplying natural gas by pipeline” and that on a “conservative” basis the average profit margin was as follows:

  • IGUA-SA members were overcharged by 55%, over a nine-year period from 2014 to 2022;
  • Egoli Gas has been charged an excess profit margin of 72%, over nine years from 2014 to 2022; And
  • Spring Lights Gas has been overcharged by 59%, over a five-year period from 2018 to 2022.

The committee indicated that these exorbitant prices will generally pass on to consumers.

It accused Sasol Gas of not cooperating with its investigation.

Sasol Gas did not provide the Commission with the relevant information it requested during its investigation. Instead, Sasol Gas chose to file a review application with the Competition Appeal Court (CAC) challenging the commission’s competence to investigate the three complaints.

The commission said it has only one year under competition law to investigate such complaints unless it is extended by the complainant.

“In this case, the period of one year has already passed and one of the complainants indicated that no further extension could be granted pending judicial challenge to Sasol Gas… In the circumstances, and in the interest of the public interest, the duty to refer the complaint to [Competition] Litigating Special Court Before It Falls.”

Sasol confirmed its objection to the committee’s jurisdiction.

Sasol spokesperson Alex Anderson said in an email response to: Daily Maverick inquiries.

Sasol Gas has not officially received the referral of the complaint. “As soon as Sasol Gas has had an opportunity to consider the referral, we will respond as appropriate,” Anderson said.

The market’s response to the news was rather muted – Sasol’s share price fell in afternoon trading by just 1.5%. However, against the backdrop of an unfolding cost-of-living crisis, no company wants to be labeled for excessive pricing affecting consumers. As is usually the case in matters like this, lawyers will be busy with this one, and it doesn’t come cheap. DM


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