The Competition Commission has referred a complaint of excessive pricing of natural piped gas against Sasol Gas to the Competition Tribunal.

“The commission found that Sasol Gas extracted mark-ups of up to 72%. The excessive pricing has continued for almost a decade and is ongoing,” it said.

The referral stems from three complaints against Sasol Gas that were lodged with the commission in early 2022 by Egoli Gas, the Industrial Gas Users Association of South Africa (IGUA-SA) and Spring Lights Gas.

The complainants alleged, among 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.

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 gas 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 gasfields, in Mozambique, through an 865-km-long pipeline that transports the gas from Mozambique to Secunda. Publicly available information indicates that the Pande and Temane gasfields in Mozambique are likely to start declining in 2025 and are likely to be depleted between 2029 and 2030.

The commission relied on publicly available information to assess the prices charged by Sasol Gas to the complainants against the costs 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 in its Trade Statistics Data, reflecting the value and volume of natural gas imports from Mozambique.

Given 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, on a conservative basis, to be excessive.

“IGUA-SA members were charged an excessive mark-up of 55% over nine years from 2014 to 2022, Egoli Gas 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,” the commission said.

Further, 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.

Meanwhile, 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. 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 said.

SASOL RESPONDS
Sasol has told Engineering News that Sasol Gas has yet to formally receive the complaint referral.

"Once Sasol Gas has had an opportunity to consider the referral, we will respond as appropriate.

“Sasol Gas has challenged the commission’s jurisdiction to investigate the gas pricing complaints on the basis of the National Energy Regulator of South Africa'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,” it noted.