Investigation? What investigation? Finance minister Trevor Manuel's budget announcement that government plans to appoint a task force to consider transferring Sasol and PetroSA (formerly Mossgas) profits to motorists, caught the synfuels industry by surprise. Investors were also shocked: the announcement immediately knocked 7% off Sasol's share price on Wednesday.
Until 1995, the synfuels industry enjoyed financial compensation from fuel levies whenever international oil prices were low - but also repaid when they were above a certain level. According to some estimates, Sasol received up to R6bn in subsidies.
Now the industry is enjoying windfall profits, with oil prices last year pushing US$70; government thinks motorists should get some of it back.
Minerals & energy minister Lindiwe Hendricks told parliament late last year that a committee had looked at the question of tariff protection for the industry. This was after Democratic Alliance MP Hendrik Schmidt called for a supertax on Sasol profits, to finance a reduction in the fuel tax of up to 20c/.
On Wednesday, Manuel said that because SA's oil pricing is based on import parity and partial regulation, "the industry is in a position to reap substantial economic rents when crude oil prices are high. Such windfall gains should be shared with the public". A task force would investigate.
Sasol was stunned.
A statement by group public affairs manager Andre Botha said the company had seen no proposals and "would be engaging with government to obtain further information on the proposed investigation".
While admitting that motorists are suffering from high fuel prices, Botha says Sasol "is concerned that its ability to reinvest profits in its operations will be compromised if windfall taxes are imposed. Selecting local companies for possible legislative intervention will be severely detrimental to the ability of SA companies to compete with the much larger oil supermajors."
He acknowledges that Sasol received tariff protection. But it also paid in when oil prices exceeded a set limit. He says Sasol has repaid all obligations to government and complied with all tariff protection conditions.
While motorists await a possible windfall fuel price reduction, they must pay more for now. Manuel announced a 5c/ increase in the Road Accident Fund fuel levy, with effect from April 6. Overall, the fund levy will account for 36,5c in the price of every litre of petrol and diesel.
