File photo of tankers arriving in the Sasol Gas Engine power plant in Sasolburg. Photo: AFP
The Competition Commission is prosecuting Sasol Gas for excessive pricing of natural piped gas by as much as 72%.
In a statement yesterday, the Commission said this followed complaints against the company of charging excessive prices on natural gas for almost a decade.
Natural gas is used as an alternative source of energy to electricity and is used by industrial, commercial, and domestic customers. Sasol Gas is the only supplier of natural piped gas in South Africa and supplies gas to traders and end-users in the country through a network of transmission and distribution pipelines.
Sasol Gas sources natural gas from the Pande and Temane gas fields in Mozambique through an 865km long pipeline that transports the gas from Mozambique to Secunda.
According to the Commission, the prosecution stems from three complaints lodged, in early 2022 with the Commission by Egoli Gas, the Industrial Gas Users Association of South Africa (IGUA-SA), and Spring Lights Gas.
"The complainants alleged, amongst others, that Sasol Gas engaged in excessive pricing of natural piped gas in contravention of the Competition Act. Egoli Gas and Spring Lights are gas traders, and IGUA-SA’s members are industrial gas customers," it said.
The Commission said it relied on publicly available information to assess the prices charged by Sasol Gas against the cost of supplying natural piped gas.
"This information consists of the gas landing cost information that Sasol Gas provides to the United States Securities and Exchange Commission each financial year, and information recorded by the South African Revenue Service (Sars) in its Trade Statistics Data, reflecting the value and volume of natural gas imports from Mozambique," the Commission said.
According to the Commission, considering the landed cost of the gas molecule and the trading cost, the Commission found the average mark-ups per gigajoule by Sasol Gas to the three complainants were, excessive.
"IGUA-SA members were charged an excessive mark-up of 55%, over nine years from 2014 to 2022; Egoli was charged an excessive mark-up of 72%, over nine years from 2014 to 2022; and Spring Lights Gas was charged an excessive mark-up of 59%, over five years from 2018 to 2022," it said.
The Commission said it also found that Sasol Gas’ excessive pricing to gas traders and industrial customers ultimately affected the pricing to the end consumers, as gas traders and industrial customers generally pass these costs to consumers.
"Sasol Gas did not provide the Commission with the relevant information it had requested during its investigation. Instead, Sasol Gas elected to file a review application in the Competition Appeal Court (CAC) challenging the Commission’s jurisdiction to investigate the three complaints.
"However, the Competition Act only affords the Commission a period of one year to investigate a complaint lodged by a member of the public unless extended by the complainant," the Commission said.
It said in this case, the one-year period had already lapsed and one of the complainants had indicated that it was not amenable to granting any further extension pending Sasol Gas’ jurisdictional challenge in the CAC.
"Under these circumstances, and in the public interest, the Commission had a duty to refer the complaint to the Tribunal for prosecution before it lapses.
"The Commission is of the view that this matter requires expeditious resolution. If the Commission is hindered by the conduct of respondents from referring complaints from members of the public to the Tribunal timeously, the rights of complainants to have their complaints heard and to obtain relief from the Tribunal will be negatively affected," it said.
Meanwhile, Sasol said on July 10, 2023, that the Competition Commission had taken a decision to refer the gas pricing-related complaints made by certain customers of Sasol Gas relating to the Maximum Gas Price for the September 1, 2021, to June 30, 2022 period (R68,39/GJ), to the Competition Tribunal.
"Sasol Gas is yet to formally receive the complaint referral. Once Sasol Gas has had an opportunity to consider the referral, we will respond as appropriate," the group said.
Sasol Gas said it had challenged the Commission’s jurisdiction to investigate the gas pricing complaints on the basis of NERSA’s regulatory powers under the Gas Act.
"This jurisdictional challenge is the subject of a legal review application currently pending before the Competition Appeal Court, the outcome of which will determine the ability of the Commission to investigate the gas pricing complaints that are the subject of the complaint referral made on July 10, 2023," it said.
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