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

The commission found that Sasol Gas contravened the Competition Act and extracted markups of up to 72% on the product, with excessive pricing having continued for almost a decade to date.

Industrial, commercial, and domestic customers in South Africa use natural gas as an alternative source of energy to electricity. Sasol Gas – which sources natural gas from the Pande and Temane gas fields in Mozambique – is the only supplier of natural piped gas in the South Africa, selling to gas traders and end-users in the country through a network of transmission and distribution pipelines.

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. 

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

"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," the watchdog said in a statement.

"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."  

Considering the landed cost of the gas molecule and the trading cost, the commission found the average markups per gigajoule by Sasol Gas to the three complainants were, on a conservative basis, as follows:

• IGUA-SA members were charged an excessive markup of 55%, over nine years from 2014 to 2022;
• Egoli was charged an excessive markup of 72%, over nine years from 2014 to 2022; and
• Spring Lights Gas was charged an excessive markup of 59%, over five years from 2018 to 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 on to consumers.  

The commission said Sasol Gas did not provide it with the relevant information it had 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 three complaints," it said.

Sasol spokesperson Alex Anderson also noted that Sasol Gas had 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 10 July 2023," he said.

Anderson said Sasol Gas is yet to formally receive the complaint referral from the commission to the tribunal and would respond as appropriate once it's had the opportunity to consider it.