Sasol Gas Prices Will Cut Competitiveness, Manufacturers Say

The South African energy regulator’s decision to set a maximum gas price for consumers will undermine competitiveness in the continent’s largest economy, a manufacturing group said.

The National Energy Regulator approved a gas-pricing structure for Sasol Ltd. (SOL), South Africa’s biggest supplier of the fuel, that starts in March 2014, Pretoria-based Nersa said in a statement yesterday.

The regulator set a maximum gas price of 117.69 rand ($13) a gigajoule and laid out discounts from that level for certain users. The largest will be 37.5 percent for customers buying more than 4 million gigajoules of gas a year, while the smallest is 7.5 percent for buyers of less than 400 gigajoules.

“The maximum molecule price is more than double that of Sasol’s current average pricing,” Coenraad Bezuidenhout, executive director of the Manufacturing Circle, which represents 40 large companies that employ 200,000 people, said in an e- mailed statement. While Sasol, which is also the world’s largest maker of fuel from coal, currently charges an average 64 rand per gigajoule to external customers, it will be entitled to charge 105 rand to 140 rand, he said.

The new pricing regime will result in standardized prices for consumers who buy similar quantities of gas, Jacqui O’Sullivan, a spokeswoman for Sasol, said in e-mailed comments.

“As Sasol has stated previously, the new prices we will charge will be below the Nersa-set overall and class-maximum prices,” she said.

Sasol Gas operates a supply network through 2,500 kilometers (1,550 miles) of pipelines in South Africa and Mozambique, delivering more than 150 million gigajoules of the fuel to 550 industrial and commercial customers annually, according to its website.

One gigajoule is equal to 0.27 megawatt-hours, enough to power 135 to 270 U.S. homes.

Sasol’s shares closed 1.4 percent lower, the biggest decline in a month, at 410.11 rand in Johannesburg.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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