Sasol has turned the tables on Transnet in a R1.3bn legal case initiated by the state-owned entity against it and TotalEnergies over claims of underpaid tariffs.
The chemicals and energy giant has obtained a court order that compels Transnet to provide it with commercially sensitive information, including declarations, disclosures and internal spreadsheets reflecting volumes by fuel type conveyed during 2020, 2021, 2022 and 2023 along each pipeline route.
The high court in Pretoria ordered Transnet to hand over the documents, which include information about the costs, revenue and resources associated with operating its petroleum pipelines, within 15 days.
Transnet, Sasol and TotalEnergies are at loggerheads after Transnet demanded R815m from Sasol and R461m from TotalEnergies for services related to the use of its pipeline to move crude oil from Durban to the Natref refinery at Sasolburg in the Free State.
The claim arises from invoices issued for services rendered for the period after the termination of a variation agreement in 2020. The amounts rely on tariffs set by the National Energy Regulator of SA (Nersa).
The variation agreement which gave rise to the tariffs dispute is a contract that has its roots in 1967, when the apartheid regime wanted to protect energy security in the face of sanctions.
At the time, coastal refineries did not have the capacity to meet inland demand, and government established an inland oil refinery in Sasolburg to avoid running out of fuel.
The then government signed an agreement with TotalEnergies to set up the refinery, provided that the costs of transporting crude oil from the coast to the inland refinery would not place TotalEnergies at a disadvantage to coastal refineries.
To secure TotalEnergies’ participation, a “neutrality principle” was included in the contract, which ensured tariffs for the conveyance of crude oil from the coast to Natref were structured so that the principle of neutrality was maintained. A tariff for transporting the crude oil was set at 40c per 100lb. The agreement was amended in 1991 and provided that Transnet would increase the tariffs by no more than a weighted average cost for the conveyance of refined petroleum products from the coast to inland markets.
However, in 2008 Transnet breached the variation agreement by increasing the tariff 10.25%. This was followed by another breach in 2011, when Transnet hiked the tariff by 107%, sparking a legal battle with Sasol and TotalEnergies.
In 2020, Transnet terminated the agreement, arguing that the evergreen contract in essence ensured TotalEnergies and Sasol derived a favourable benefit not enjoyed by other oil companies such as BP, Shell and Caltex. Another reason Transnet gave was that it had become legally impermissible for it to comply with the variation agreement as a result of changes in the law over the years, in particular the transfer of powers of determining tariffs to Nersa.
The Constitutional Court ruled in June 2022 that Transnet was within its rights to cancel.
Transnet, which holds a licence to operate SA’s petroleum pipeline system, contends in its legal papers that it is not obliged to discount the tariff if Nersa hasn’t approved a discounted tariff.
In Transnet’s view, the “just and equitable” amount payable by Sasol is the full Nersa maximum tariff each year: R467.71/m³ in the 2020/21 tariff year; R478.91/m³ in 2021/22; and R517.30/m³ in 2022/23.
Sasol told the court the information it sought would shed light on what the tariff would have been had Transnet acted lawfully and whether the amounts claimed would produce a fair and just result if imposed by the trial court.
Sasol argued that charging a lower tariff for the crude oil pipeline would not be discriminatory because the services were nonequivalent and the cost of supplying and operating the pipeline was far lower than transporting white fuel via the Multi-Product Pipeline.
Transnet said it was not unusual for parties in litigation to share information, some of which may be confidential or commercially sensitive.
“Transnet will comply with the court’s interlocutory order under the court’s confidentiality regime,” a spokesperson said.
“For the information that Transnet has deemed confidential or commercially sensitive, the arrangement as agreed between the parties is that Transnet would only share such information with the legal representatives and their experts for purposes of the specific issues to be dealt with.”
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