Nersa approves Sasol Gas’ price ceiling

The National Energy Regulator of SA (Nersa) has approved Sasol Gas’ application for a maximum gas price for the period July 1 2025 to June 30 2026, while rejecting certain cost-recovery elements proposed by the company.

The decision was made at a Nersa meeting on June 30 and announced on July 2.

The approved maximum prices are R87.04/gigajoule per annum for end-user customers and R82.69/GJ for third-party traders and resellers.

These prices will be effective from July 1 until the end of September and will be adjusted quarterly based on Sasol Gas’ verified cost of acquisition until June 2026. This quarterly adjustment would ensure that the prices remained “fair and reasonable”, reflecting changes in Sasol Gas’ costs, the regulator said in the statement on Wednesday.

In addition to the approved prices, third-party traders and resellers will receive a minimum discount of 5% from the maximum gas price. “This discount is expected to benefit traders and resellers, enabling them to offer competitive prices to their customers.”

The approved maximum price excludes VAT and the prices will remain effective until the date of approval of a new maximum price by the energy regulator.

However, Nersa rejected Sasol Gas’ request to recover R1.80/GJ per annum for past price differences. This is related to the difference between the approved maximum gas prices for the 2023/24 financial year and the actual prices charged to customers between 1 July and 31 December 2023. The regulator also rejected the level of trading costs proposed by Sasol Gas, deeming it to be excessive and including unjustified expenses.

As part of the approval, Sasol Gas will be required to provide Nersa with cost and pricing information on a quarterly basis for monitoring and approval. This will enable the regulator to ensure that Sasol Gas complies with the approved maximum prices and makes adjustments as necessary.

Nersa may also review and subject the price adjustment to a compulsory consultation if there is a significant change in the cost of gas affecting the maximum gas price. “This will ensure that the prices remain flexible and can be adjusted in response to changes in the market,” the energy regulator said.

This decision comes amid challenges in SA’s piped-gas market. Recent shifts in the industry’s supply dynamics have led to price increases, sparking concern among stakeholders about regulatory compliance and price predictability.

The SA gas market remains highly concentrated, with Sasol Gas holding a dominant position, despite the presence of several third-party traders. Competition is limited due to the scarcity of alternative gas suppliers and the inability of customers to switch easily, factors that justify Nersa’s regulatory intervention to set maximum prices.

Previous attempts by the regulator to approve maximum gas prices have faced legal challenges. In June 2024, the high court set aside an earlier Nersa decision approving Sasol Gas’ maximum gas price, ruling that the use of international benchmarking was not appropriate for SA. The court found that Nersa’s and Sasol’s arguments did not adequately justify the pricing methodology and referred the matter back to the regulator for reconsideration.

Nersa’s decision is guided by its mandate under the Gas Act of 2001 to regulate gas prices in markets with inadequate competition. The energy regulator’s approval of a maximum price with quarterly adjustments and cost transparency requirements is designed to balance the needs of consumers and industry players in the absence of sufficient competition.

Correction: July 3 2025

Nersa initially indicated that the approved maximum price was inclusive of VAT, it is not.

tsobol@businesslive.co.za