Sasol Gas has a monopoly on the pipeline gas market, according to the Gas Users Association.
- The Competition Commission referred a case against Sasol Gas to the Competition Tribunal.
- The commission’s investigation found that Sasol charged excessive fees of up to 72%.
- Meanwhile, Sasol Gas has challenged the jurisdiction of the watchdog to investigate the matter.
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The Competition Commission referred a complaint against Sasol for excessive pricing of natural pipeline gas to the Competition Tribunal.
The panel found that Sasol Gas breached competition law and extorted prices of up to 72% on the product, with excessive pricing continuing for nearly a decade now.
Industrial, commercial and domestic customers in South Africa use natural gas as an alternative energy source for electricity. Sasol Gas – which makes natural gas from Mozambique’s Pande and Timani gas fields – is South Africa’s only pipeline natural gas supplier, selling to gas traders and end users in the country through a network of transmission and distribution pipelines.
Publicly available information indicates that the Pande and Timani gas fields in Mozambique are likely to start declining in 2025 and are likely to be depleted between 2029 and 2030.
The lawsuit stems from three complaints filed against Sasol Gas last year by Egoli Gas, the Industrial Gas Users Association of South Africa (IGUA-SA), and Spring Lights Gas.
“The committee relied on publicly available information to assess the prices charged by Sasol Gas to the complainants for the costs of supplying natural gas through pipelines,” the agency said in a statement.
“This information consists of gas landing cost information that Sasol Gas submits to the US Securities and Exchange Commission in each fiscal year and information that the South African Revenue Service records in its trade statistics data, which reflects the value and volume of natural gas imports from Mozambique.”
Considering the gas particle landing cost and the handling cost, the Panel found that the average profit margin per GJ by Sasol Gas for the three complainants was, on a conservative basis, as follows:
- IGUA-SA members were overcharged by 55%, over a nine-year period from 2014 to 2022;
- Egoli was overcharged by 72%, over a nine-year period from 2014 to 2022; And
- Spring Lights Gas has been overcharged by 59%, over a five-year period from 2018 to 2022.
The panel also found that Sasol Gas’ excessive pricing to gas traders and industrial customers ultimately affected prices to end consumers, as gas traders and industrial customers generally pass these costs on to consumers.
The commission said that Sasol Gas had not provided it with the relevant information it requested during its investigation.
“Instead, Sasol Gas chose to file a review application in the Court of Appeal of Competition to challenge the competence of the committee to investigate the three complaints,” it added.
A Sasol spokesperson, Alex Anderson, also noted that Sasol Gas had challenged the Commission’s jurisdiction to investigate complaints of gas pricing on the basis of the NERRA to the South African regulatory authorities under the Gas Act.
“This challenge to jurisdiction is the subject of a legal review application currently pending before the Court of Appeal of Competition, the outcome of which will determine the Commission’s ability to investigate the gas pricing complaints that are the subject of the referral of the complaint filed on 10 July 2023,” he said.
Anderson said Sasol Gas has yet to receive a formal referral of the complaint from the committee to the court and will respond as appropriate once it has had an opportunity to look into the matter.