Sasol nailed for overpriced natural gas

The Competition Commission is prosecuting Sasol Gas for marking up natural piped gas prices by as much as 72%.

It referred a complaint against the company on Monday, 10 July 2023, and the Competition Commission says Sasol has charged excessive prices on natural gas for almost a decade.

The prosecution stems from three complaints against Sasol that were lodged in early 2022, and the Competition Commission’s assessments revealed that:

  • IGUA-SA members were charged a markup of 55% between 2014 and 2022;
  • Egoli Gas was charged a markup of 72% between 2014 and 2022; and,
  • Spring Lights Gas was charged a markup of 59% between 2018 and 2022.

“The Commission 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,” it said.

Egoli Gas and Spring Lights Gas are traders, while IGUA-SA’s members are industrial gas customers.

“The Competition Commission has on Monday, 10 July 2023, referred a complaint against Sasol Gas (Pty) Ltd for excessive pricing of natural piped gas to the Competition Tribunal in contravention of section 8(1)(a) of the Competition Act 89 of 1998, as amended,” it said.

“The Commission found that Sasol Gas extracted markups of up to 72%. The excessive pricing has continued for almost a decade and is ongoing.”

The Competition Commission relied on publicly available information to assess Sasol Gas’s pricing.

It allowed Sasol Gas the opportunity to provide relevant information, but it instead elected to submit a review application at the Competition Appeal Court, challenging the Competition Commission’s jurisdiction to investigate the 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.

“In this case, the one-year period has already lapsed, and one of the complainants has indicated that it is 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,” it added.

Natural gas is an alternative energy source to electricity. It is used by a broad range of customers, including domestic, industrial, and commercial — and Sasol Gas holds a monopoly in South Africa.

“Sasol Gas is the only supplier of natural piped gas in South Africa and supplies gas to gas traders and end-users in the country through a network of transmission and distribution pipelines,” the Competition Commission said.

A spokesperson for Sasol said they have yet to formally receive the complaint referral.

“Once Sasol Gas has had an opportunity to consider the referral, we will respond as appropriate,” it said.

Sasol said the maximum gas price between 1 September 2021 and 30 June 2022 period was R68.39/GJ.

“Sasol Gas has challenged the Commission’s jurisdiction to investigate the gas pricing complaints on the basis of [energy regulator] Nersa’s regulatory powers under the Gas Act,” the company said.

“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 10 July 2023.”

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Sasol nailed for overpriced natural gas