Sasol has announced a 96% increase in the price of piped gas, to R133,34 per gigajoule (GJ).
Industrial gas users say this poses a huge risk to the economy.
The price hike would cost South Africa R325 million per month as of 1 August 2022, warned industry body the Industrial Gas Users Association of Southern Africa (Igua-SA).
In conversation with Bruce Whitfield, Igua-SA CEO Jaco Human accuses Sasol of price gouging.
The energy company says the increases fall below the maximum allowable price in terms of the prevailing methodology for setting domestic gas prices.
The price change reflects the cyclical nature of gas and other commodity prices’ response to inflationary pressures on operating costs, an increase in gas exploration and development activities. This also includes related funding requirements to enable gas supply security to South Africa.
Sasol statement
Industrial gas users are already taking the National Energy Regulator of SA (Nersa) to court over the methodology used to set gas prices.
RELATED: SA's industrial gas users face 228% price hike, take energy regulator to court
In its response, Nersa stated it had not approved the increases announced by Sasol Gas.
The regulator says it will investigate any possible "unreasonable or excessive pricing cases".
It will also consider other available avenues to ensure the previous decision taken before the international energy crisis 'is not inimical to the South African consumer and the gas industry’ pledged Nomfundo Maseti (responsible for piped gas regulation).
Bruce Whitfield interviews Igua-SA CEO Jaco Human, who says the huge hike was anticipated almost a year ago and Nersa warned accordingly.
What the market didn't expect was the unilateral short notice by Sasol of this increase... effectively from the first of August.
Jaco Human, CEO - Industrial Gas Users Association of Southern Africa
That certainly came as a shock to many industries, particularly considering that the regulator is in a review process of the [pricing] methodology.
Jaco Human, CEO - Industrial Gas Users Association of Southern Africa
Sasol would argue it has the right to push ahead with the increase says Human, because thecurrent methodology allows it to price up to certain levels.
"These levels are unfortunately linked to global indexes" he emphasizes.
That's the nub of the complaint of industry... You cannot link piped gas coming out of Mozambique with a different product, which is LNG on global markets... two different products; two different supply chains...
Jaco Human, CEO - Industrial Gas Users Association of Southern Africa
The problem is that the regulator is trying to mitigate this right now as we speak, and it's also an issue that the industry has taken up with the High Court in order to have Nersa's methodology set aside.
Jaco Human, CEO - Industrial Gas Users Association of Southern Africa
Is Sasol price gouging?
"I would argue yes."
Human notes that the applicable methodology is relevant up to mid-2023.
Scroll to the top of the article to listen to the interview
This article first appeared on CapeTalk : Sasol is price gouging with huge piped gas price hike says industry body