Page 12 - AfrOil Week 03 2022

AfrOil POLICY AfrOil

After successfully defending a first court action, spearheaded by civic organisations. The groups
Shell was forced to abandon its plans for the were granted an interim interdict, which will
time being, after South Africa’s High Court in stand until a ruling can be made on whether
Makhanda imposed an interdict on the com- further environmental authorisation is required.
pany on December 28, ordering it to cease its Judge Gerald Bloem said in that court action
seismic blasting immediately. It also ordered that Shell was under the obligation to consult
Shell and Energy Minister Gwede Mantashe to with the communities and people who held
pay the costs of the application. customary rights, and who would be impacted
The court action against Shell was also by the seismic survey. ™

Industry body: Nersa’s “failed” pricing

structure could mean 220% gas price hike

SOUTH AFRICA NATURAL gas prices in South Africa could industry, which is vital to the future growth and
jump by more than 220% this year, an organ- development of South Africa’s fragile economy,”
isation representing industrial gas users in Human stated in court papers.
South Africa has stated in court papers. The Human noted in the radio interview that
Industrial Gas Users Association of Southern Sasol Gas is the monopoly supplier in South
Africa (IGUA-SA) is now legally challenging the Africa and explained why IGUA-SA finds Ner-
“failed” gas pricing methodology of the National sa’s pricing methodology irrational and there-
Energy Regulator of South Africa (Nersa). fore unreasonable.
IGUA-SA, whose members include South “Nersa was instructed by South Africa’s
African mega-companies such as global steel Constitutional Court in 2019 to go back to the
producer ArcelorMittal and packaging maker drawing board and set a new pricing mecha-
Nampak, is taking Nersa to court over this nism,” he said. “Nersa did exactly that and came
methodology, which is used to set gas prices. Its up with a price that is linked to international
challenge aims to persuade the court to disallow benchmarking.”
the regulator’s decision on the maximum price But the guidelines provided by the Constitu-
for piped gas supplies. tional Court were not followed in this, which has
To be precise, the Association has filed an led to the steep hike, Human said. ™
application to have the Pretoria High Court set
aside Nersa’s approval of maximum prices for
piped gas applicable to supplier company Sasol
Gas over the March 2014-June 2023 period.
Originally decided by Nersa in 2013, the meth-
odology under which these were calculated was
subject to a successful legal challenge in 2019,
and a definitive revised version was eventually
announced by Nersa in July 2021. IGUA-SA is
far from satisfied, however.
Jaco Human, the executive officer of
IGUA-SA, told the South African radio show
702 that Nersa’s pricing methodology had been
irrational to start with and remained irrational.
The industrial gas user market is quite a signif-
icant energy sector in South Africa, with many
manufacturers deeply reliant on natural gas
energy.
IGUA-SA said in court papers that “between
the third quarter of 2022 and the second quar-
ter of 2023 alone, the second methodology will
result in a cost to gas users and the economy of
around an additional ZAR8.9bn [$577mn].”
The Association says the increase will have
an adverse impact on South African inflation,
investment and global competitiveness. “It will
not only substantially prejudice downstream gas
users, but it will also harm the manufacturing IGUA-SA has sought relief from Nersa’s gas pricing (Image: IGUA-SA)

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