Sasol has given assurance that it will not implement the maximum gas price as it waits to resolve the issue with the national energy regulator of South Africa.
The increase would have meant that users would see a 96% price increase. Sasol released its results on Tuesday posting a 147% jump in full-year profit that was boosted by higher fuel and chemicals prices.
The group was also able to declare its first dividend since 2019.
There has been concern about Sasol’s excessive price increase which poses a threat to many gas users. This has attracted heavy criticism from users and the Industrial Gas Users Association of Southern Africa.
Sasol says it has been engaging with NERSA since the beginning of the year to finalise a maximum gas pricing mechanism that will allow them to set a realistic price in today’s environment.
“We have been engaging with Nersa since the beginning of this year, to finalise within the framework of the maximum gas pricing mechanism to come through on a price that would be realistic in today’s environment given that the maximum gas price would have been R270 per gigajoule but we did not think that is realistic. We have proposed a different price level. We have engaged with Nersa and at this point in time, we haven’t finalised that. We have indicated that we will not implement this price announcement that we mentioned in August and we would like to resolve that with Nersa because, in the end, that is what they have to assess, the rationality test for a realistic price and that we will then, once we’ve reached or come to that agreement, we will take that forward with our customers. Our customers are waiting for that certainty of what the rest of the year holds within the agreed pricing framework that was agreed last year with Nersa,” says Sasol CEO Fleetwood Grobler.
Sasol says it’s looking at bringing liquefied natural gas on board.
Executive Vice President, Energy Business of Sasol Priscillah Mabelane explains, “We are making good progress in terms of our overall portfolio as you’ve seen today that we announced, the extension of the plight to 2028 at the back of that, it gives us flexibility in terms of how we bring LNG on board yet at the same time maximising exploration and development of the quality of our projects that we are already working on. In terms of LNG, we are targeting to finalise the terms sheet by the end of this year. And it’s important that we reach the right commercial terms before we commit ourselves. We are intense discussions and negotiations with our partners. That will enable us about six to eight months to complete and finalise the fid so that we can start with construction.”
Grobler says Sasol has found a creative way to get oil refinery plant NATREF output clean fuel compliant on diesel for a low investment. Sasol had previously been concerned about the funds needed for the plant to be compliant which was estimated at around R6 billion.
“I’m not going to mention the amount, but it is within the operation expense realms…on that specific amount,” Grobler adds.
Grobler says Sasol will be executing its first tranche of 600 megawatts of renewable energy in the next two to three years as part of its goal to reach net-zero emissions by 2050.
VIDEO: SASOL posts rise in profits helped by higher fuel and chemicals prices