Sasol has decided to appeal the decision of the Pretoria high court that set aside the National Energy Regulator of SA (Nersa) approval of the group’s maximum gas prices for March 2014 to June 2023.
The group said that after considering the judgment it had decided to have another court listen to the matter, with the hope that a different court would rule in its favour.
“On 20 June 2024 the high court set aside the 2021 Nersa maximum gas price decision and directed Nersa to make a new decision for the period April 2014 to June 2023. Sasol Gas has applied for leave to appeal the high court decision,” the company said.
The Johannesburg-based group had to refund customers about R1.7bn after a previous ruling that reversed the 2013 and 2017 price determinations. It said retrospective adjustments of the previous decisions caused great prejudice to its business operations.
Sasol Gas previously told Business Day that the high court’s decision contributed to the “continued lack of regulatory certainty in the SA piped gas market that is already facing an uncertain future and a lack of incentive for investment for continued future gas supply to the market”.
Nersa is responsible for regulating the piped-gas industry in accordance with the provisions of the Gas Act. It is supported by the piped-gas division, which is responsible for supporting the energy regulator in the administration of the Mozambique Gas Pipeline Agreement between the government of SA and Sasol.
Sasol and Nersa were dragged to court by the Industrial Gas Users Association of Southern Africa (Igua-SA), which represents industrial gas users such as Illovo, Nampak, Mondi and ArcelorMittal SA.
Igua-SA successfully argued that Nersa’s methodology to approve Sasol’s maximum piped-gas prices was flawed.
The lobby group’s contention was that the regulator’s use of international benchmarks did not reflect the realities of the SA gas market, resulting in prices that were unreasonably high for consumers.
Sasol argued that international price benchmarking was a widely accepted regulatory instrument used as a proxy for a competitive market and that because gas was an internationally traded commodity, prices followed cyclical trends and were not closely linked to producers’ extraction costs.
The court rejected Nersa’s and Sasol’s arguments, and sent the matter back to the regulator to come to a new determination, a decision that Sasol and Nersa are now seeking to appeal.
Sasol also confirmed that it was headed to the courts with Transnet in their contractual dispute. This is after Transnet launched leave to appeal proceedings against the decision of the Johannesburg high court that the freight and rail group pay R8.5bn to Sasol and TotalEnergies in a long-running dispute about pipeline tariffs.
The legal battle was initiated by Sasol and TotalEnergies, seeking compensation from Transnet. The issue stemmed from Transnet’s breach of its obligation to set pipeline tariffs for the conveyance of crude oil, as outlined in a 1991 agreement. Transnet had been overcharging Sasol’s oil division for years.
The court in that matter ordered Transnet to pay Sasol R6.2bn inclusive of interest, with TotalEnergies set for a R2.3bn windfall.
“On 18 June 2024, the high court handed down a judgment in favour of Sasol Oil for damages claimed against Transnet, resulting from Transnet’s breach of a commercial agreement that had been entered into between the parties. Transnet has applied for leave to appeal the high court decision,” Sasol said.
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