On 18 June 2024, the High Court of South Africa confirmed the application by the Industrial Gas Users Association of South Africa (“IGUA-SA”), to set aside the decision of the National Energy Regulator of South Africa (“NERSA”), in which NERSA had approved a maximum gas price application by Sasol Gas. The High Court considered that the use of international benchmarking as a method to determine maximum gas prices was not reasonable in the context of the South African gas market, as the prices of the benchmark hubs would be affected by circumstances that may have little to no impact on the supply to the South African market. The High Court considered that the arguments raised by NERSA and Sasol did “not hold water”, and accordingly has set aside NERSA’s determination, and has remitted the consideration back to NERSA.
An RBB team led by Simon Lee and Patrick Smith has provided advice and analysis to IGUA-SA and its attorneys, Norton Rose Fulbright for over a decade. During this time RBB has prepared and submitted numerous expert economist reports, participated in workshops, stakeholder conferences, public hearings and a series of trials in the High Court, Supreme Court of Appeal, and Constitutional Court, and investigations and hearings before the competition agencies, including the Competition Commission, Competition Tribunal and Competition Appeal Court.
Background
In 2019, following a lengthy litigation, the Supreme Court of Appeal, and later the Constitutional Court, each confirmed that NERSA’s first attempt at coming up with a methodology for determining and approving maximum gas prices for the period from 2014, had been irrational. This most recent decision in the context of the present litigation confirms that NERSA’s second attempt was also irrational.
In the meantime, IGUA-SA has successfully brought several applications before the competition agencies, to prevent Sasol from implementing significant price rises. On 18 May 2023, the Competition Tribunal interdicted Sasol Gas from raising prices, on the basis that IGUA-SA had provided prima facie evidence that an increase to Sasol Gas’ price for natural gas would result in an excessive price. On 5 March 2024, the Competition Appeal Court confirmed that the competition agencies and the energy regulator enjoy concurrent jurisdiction, in that the competition agencies are able to investigate whether gas prices are excessive, while the energy regulator can consider whether or not to approve applications for maximum gas prices.
