A judgment by the competition appeal court on Tuesday has “paved the way” for the prosecution of Sasol Gas at the Competition Tribunal over excessive gas pricing, the Competition Commission said on Wednesday.
In response to the court’s decision, the commission said it also re-emphasised the authority’s mandate to investigate and prosecute excessive pricing complaints in the piped natural gas industry.
In its appeal, Sasol Gas challenged the commission’s jurisdiction to investigate those complaints, arguing that gas prices were determined by the National Energy Regulator of SA (Nersa).
Sasol Gas contended that Nersa had the sole jurisdiction to deal with the conduct of Sasol Gas, including the jurisdiction to establish the maximum price under the Gas Act. The company also argued that competition authorities didn’t have the power to investigate or determine whether it had engaged in excessive pricing.
The commission, however, said it had the statutory power to investigate complaints it received and to issue summons as part of its investigations.
"[The court’s] decision confirmed that the commission (and by extension competition authorities) have concurrent jurisdiction with Nersa over Sasol Gas’s conduct. Nersa may determine the maximum price of gas under the Gas Act, and the commission may investigate alleged excessive pricing under the Competition Act,” the commission said.
The commission launched the investigation after Egoli Gas, the Industrial Gas Users Association of Southern Africa (IGUA) and Spring Lights Gas laid a complaint against Sasol in 2022. The company is the monopoly supplier of natural gas in SA.
In preliminary findings published in July, the commission said Sasol had been charging excessive prices for almost a decade, extracting markups of as much as 72% on natural gas. The case was then referred to the Competition Tribunal for prosecution, with the recommendation of a maximum fine of 10% of Sasol Gas revenue over the period of the contravention.
Sasol Gas filed a review application in the competition appeal court challenging the commission’s jurisdiction to investigate the case.
According to the commission, as part of its investigation it issued a summons to Sasol Gas in August 2022 to furnish information concerning the alleged excessive pricing conduct. The company refused to comply with the summons and approached the tribunal and the court to interdict the commission’s summons pending its review application.
The interdict was granted, but the decision handed down by the court on Tuesday, which dismissed the review application, means the commission will also be able to obtain the relevant costing data from Sasol Gas that forms the basis of its pricing for natural piped gas.
In response to Business Day’s request for comment on the court’s decision, Sasol said it was studying the judgment to “decide on the most appropriate next steps in the matter”.
Industrial gas users in SA have sounded the alarm over a looming gas crisis after Sasol announced last year that it would cease supplies from the Pande and Temane fields via the Rompco pipeline to traders and industrial users in June 2026 — earlier than previously thought.
Sasol will instead use gas it can still source from the fields in Mozambique for its own operations as the chemicals and energy company faces pressure to implement its climate change targets and move away from higher-carbon emitting fuel sources such as coal. IGUA, which represents industrial gas users such as ArcelorMittal, said SA had a few months left to act to secure alternative supplies to avoid “day zero”.
Update: March 6 2023
This story has additional information on gas supplies.
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