Sasol gas monopoly prices spark an outcry

CAPE TOWN — The price of piped gas has ignited a war of words between Sasol and 13 of the country’s heavyweight manufacturers, which complain that the gas producer’s natural monopoly is crimping their competitiveness.

The companies all belong to industry body the Manufacturing Circle, and include ArcelorMittal, Columbus Stainless, SABMiller, Consol, Nampak, and Illovo Sugar.

Combined, these companies employ 43,000 people and claim that Sasol’s gas represents about 10% of their input costs.

Sasol is conducting a round of negotiations with many of these manufacturers, which are concerned that the price may increase to such an extent that it may push input costs up 20%, eroding their profit margins, which could lead to job losses.

Manufacturing Circle executive director Coenraad Bezuidenhout said: “If government policy is to rebuild the country’s manufacturing capacity, then it must do something to help on the input costs, especially gas, and other forms of energy such as electricity.”

The Manufacturing Circle has written to Parliament’s energy committee complaining of their plight.

The National Energy Regulator of SA (Nersa) has set the ceiling for natural piped gas at R117 per gigajoule, which means that Sasol, which is the only supplier of this gas, could not increase its prices beyond that.

Mr Bezuidenhout told Business Day that Sasol currently charges about R60 per gigajoule, but that it obtains its gas at between R16 and R17 per gigajoule. “Even after placing additional costs on Sasol’s price, it is still making a 50% markup on the gas it sells to the manufacturers.”

Sasol spokesman Alex Anderson said the actual prices charged by Sasol Gas were below the maximum prices approved by Nersa. “Over 80% of our customers will experience a price decrease, while the rest of our customers, who have enjoyed a particularly low price in the past, would be experiencing some shortterm financial impact as they transition to the new gas prices.”