Nersa says several stakeholders have expressed concerns about gas prices.

  • South Africa’s energy regulator is set to investigate concerns over “excessive” gas price hikes announced by Sasol Gas.
  • Nersa will review its pricing methodology and examine the possibility of unreasonable pricing by licensees.
  • Sasol says the increase is still below the maximum acceptable price in terms of Nersa’s solution.
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South Africa’s National Energy Regulatory Authority (Nersa) will look into the concerns of multiple stakeholders about the “excessive” gas price increases announced by one of its licensees, Sasol Gas.

In a statement released on Thursday, Nersa said it had not approved “such an increase”. The country’s gas industry is regulated by Nersa under the Gas Act.

Nersa’s pricing methodology is being challenged legally by the Industrial Gas Users Association – South Africa (IGUA-SA), whose members include steelmaker ArcelorMittal and packaging company Nampak. IGUA-SA claims that the methodology used by Nersa will benefit Sasol Gas, which is the monopoly supplier of natural gas in the country.

IGUA-SA has expressed concern that gas prices will rise by 220%, Fin24 previously reported.

In a statement, Nersa said it had approved maximum gas prices for Sasol Gas in March 2021. According to Nersa, this ensured margins remained at a “reasonable” level.

“The maximum price provided for in the South African Gas Maximum Price Approval Methodology is significantly lower than the 100 rand per gigajoule (GJ) from which the licensee (Sasol Gas) was required to discount …,” the statement said.

However, Nersa noted that there was an “unprecedented surge” in international gas prices, which affected domestic prices. Nersa has now set out to review and refine its methodology to protect South Africa’s gas industry.

The regulator also plans to investigate possible excessive pricing. “Nersa does not expect licensees to use the current international gas price crisis to the detriment of consumers and industry. Therefore, Nersa will investigate any possible cases of unreasonable or excessive pricing and further cooperate with other administrative bodies that have joint jurisdiction over the matter” , – they added in it.

The regulator’s staff member in charge of pipeline gas, Nomfunda Maseti, added that Nersa would also ensure that its previous pricing decision, made before the international energy crisis, would not harm consumers and the industry.

Below the maximum price

In a written response to questions, Sasol spokesman Alex Anderson said its gas business had informed Nersa and customers that the piped gas price would rise to R133.34 per GJ. However, Anderson noted that this is well below the maximum allowable price of 273.43 rand/GJ set out in Nersa’s methodology.

Anderson said:

Sasol Gas recognizes the impact of price increases on customers, therefore Sasol has not applied the maximum allowable price determined under Nersa’s 2021 maximum gas price decision.

Sasol Gas also informed Nersa in May 2022 of the price revision. It also asked the regulator to confirm that the review is still in line with the 2021 maximum gas price decision.

“In its efforts to confirm its compliance, Sasol Gas has also engaged with Nersa on several occasions since this submission,” Anderson said.

Sasol said it believed the gas price introduced was in line with Nersa’s decision. “Sasol Gas has complied and continues to comply with the Nersa 2021 maximum price decision, which applies from April 2014 to 30 June 2023,” Anderson said.

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