South Africa’s large industrial gas consumers have termed Johannesburg-based Sasol’s move to raise prices by 96% as “untenable,” as it poses a “significant risk” to an already struggling economy, according to a local media report.

The price increase will cost the economy nearly R325 million ($20 million) per month and may force manufacturers to raise prices, the Independent Online news site reported, citing a statement issued by the Industrial Gas Users Association of Southern Africa (IGUA-SA).

“The operational cost of gas inputs is significant, and the gas pricing uncertainty holds risk for the industrial sector, which will adversely impact end consumers and the economy, IGUA-SA chief executive officer Jaco Human said.

Businesses are facing closure across the manufacturing sector and the gas industry is likely heading for a regulatory void from a National Energy Regulator of South Africa (Nersa) gas-pricing perspective, he stated.

IGUA-SA’s members are currently assessing the impact of the price rise, including planning for necessary price-related adjustments and manufacturing cutbacks, the news report said.

The new price came into effect on August 1, despite the National Energy Regulator of South Africa’s (Nersa) stating non-approval to such a move.

In a statement, Sasol explained that it recognised the impact of higher gas prices on its consumers; therefore, the R133.34 per gigajoule was far below the R273.43/GJ price increase had it applied the maximum allowable price determined by the 2021 NERSA Maximum Gas price decision.

Sasol Gas is a regulated entity under South Africa’s Gas Act and the monopoly supplier in the piped-gas industry.

(Editing by Seban Scaria )