The Industrial Gas Users’ Association of Southern Africa (IGUA-SA) said yesterday that it welcomed the decision by the Competition Tribunal to grant it an interim relief against Sasol Gas from increasing natural gas prices for the next six months.
This comes after Sasol Gas, a unit of JSE-listed Sasol in August 2022, notified its customers that it intended to increase its price for natural gas to R133.34 per gigajoule (GJ).
Natural gas is an essential input for IGUA-SA’s members, which include large industrial users of gas in South Africa. It is not liquefied petroleum gas (LPG) gas that is used in households.
This as industrial users are already under immense financial pressure amid unprecedented load shedding in the country and a series of rate hikes.
Following an outcry from customers, Sasol elected not to implement a price increase pending further discussions with the sector regulator, the National Energy Regulator of South Africa (Nersa).
However, IGUA-SA lodged a complaint with the Competition Commission (Commission), alleging that Sasol was abusing its dominant position in the market by charging an excessive price for gas to the detriment of consumers and customers.
The group then approached the Tribunal for interim relief from Sasol increasing its current price of R68.00/GJ for six months or pending the conclusion of the Commission’s investigation into its excessive pricing complaint against Sasol.
The Tribunal concluded that IGUA-SA had shown prima facie that an increase to Sasol Gas’ price for natural gas would result in an excessive price.
“Within the six-month period, Sasol Gas may not increase its natural gas price above R68.39/GJ, unless it first gives IGUA-SA at least two months’ written notice of its intention to do so. Such notice must specify the price which Sasol Gas intends to charge its customers, whether that price has been approved by Nersa and, if so, when it was approved,” the Tribunal said.
Speaking to Business Report, IGUA-SA CEO Jaco Human said: “I think from a consumer perspective, or gas user perspective, the outcome is welcomed. The issue around gas pricing and what is required in South Africa from a legal and economic perspective is quite unique because we have a monopoly supplier of natural gas.”
He said industrial gas users were heavily reliant on gas.
“Ultimately, the input costs have a bearing on the goods that we use,” he said.
Meanwhile, during the proceedings before the Tribunal, Sasol Gas challenged the competition authorities’ jurisdiction to hear the application, arguing that its pricing fell within the maximum price determined by Nersa. It was, therefore, beyond the power of the competition authorities to determine whether Sasol Gas had engaged in excessive pricing.
“On this point, the Tribunal has concluded that the Competition Act and the Gas Act create a system of concurrent jurisdiction. The Tribunal proceeded to determine whether IGUA-SA had established a basis for interim relief,” the Commission said.
Human said it was important to know that the Tribunal had jurisdiction concurrently with Nersa on gas pricing.
“When Nersa set the maximum price for gas, the Competitive Commission can now investigate whether that pricing to the maximum level is indeed excessive. That is quite a welcoming perspective,” he said.
Human said gas energy was being viewed in South Africa as a conditional fuel towards zero carbon.
“Our coal-fired power stations are taking the strain. There’s a need to decarbonise and get your natural gas as this transition fuel towards a carbon-zero environment.
“The demand for gas in South Africa far outstrips supply at the moment. There is a significant reliance by the economy on gas, they need more gas. But in the absence of any particular policy position, it’s very difficult to ascertain what the long-term gas plan is for South Africa. There is no gas master plan,” he said.
Human said gas was in a similar situation to what the country saw in the electricity space.
“The government is failing to put a gas policy in place to manage the energy security position in South Africa. That is a big complaint, and we would see that start to play out in the next 24 to 36 months,” he said.
Human said as winter approaches most of the industries were “fine” with the natural gas supplies.
BUSINESS REPORT