Sasol Gas charged too much for almost a decade, says Competition Commission

The Competition Commission has referred a complaint that Sasol Gas charged too much for gas for almost a decade to the Competition Tribunal.

The commission found that Sasol Gas extracted mark-ups of up to 72% for natural piped gas.

The excessive pricing is ongoing, the commission said.  

Natural gas is an alternative source of energy to electricity. Industrial, commercial and domestic customers use it.

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.

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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. Publicly available information indicates that the Pande and Temane gas fields in Mozambique are likely to start declining in 2025 and are likely to be depleted between 2029 and 2030.

The commission says the prosecution stems from three complaints against Sasol Gas lodged with the commission early last year by Egoli Gas, the Industrial Gas Users Association of South Africa (IGUA-SA) and Spring Lights Gas.

Egoli Gas and Spring Lights are gas traders, and IGUA-SA’s members are industrial gas customers. The complainants alleged that Sasol Gas engaged in excessive pricing of natural piped gas in contravention of the Competition Act. 

Consumer Commission investigation

According to the commission, it relied on publicly available information to assess the prices Sasol Gas charged 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 (Sars) in its Trade Statistics Data, reflecting the value and volume of natural gas imports from Mozambique. 

Considering the landed cost of the gas molecule and the trading cost, the commission found Sasol Gas’ average mark-ups per gigajoule to the three complainants were, on a conservative basis:

• 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.

In addition, the commission 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 on to consumers. 

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The commission says Sasol Gas did not provide the relevant information it requested during its investigation. Instead, Sasol Gas elected to file a review application in the Competition Appeal Court, challenging the commission’s jurisdiction to investigate the complaints.

“However, the Competition Act only affords the commission a period of one year to investigate a complaint a member of the public lodged, unless extended by the complainant. In this case, the one-year period already lapsed and one of the complainants indicated that it is not amenable to granting any further extension pending Sasol Gas’ jurisdictional challenge in the Competition Appeal Court. 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 says in a statement. 

Competition Commission wants speedy resolution

The commission added it believes this matter must be resolved quickly.

“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 obtain relief from the Tribunal will be negatively affected.”

Asked for comment, Alex Anderson, senior manager for group external communications at Sasol, said Sasol Gas is yet to formally receive the complaint referral and once it had an opportunity to consider it, Sasol will respond appropriately.

“Sasol Gas 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 will determine the ability of the commission to investigate the gas pricing complaints that are the subject of the complaint referral.”