Economic Benefits of Mozambican Gas for Sasol and South African Government
24 Pages Posted: 18 Jan 2018
Date Written: December 1, 2017
Abstract
The Sasol Pande Temane natural gas project was Mozambique’s first large-scale natural resource project. A review of the project conducted by the Centre of Public Integrity (CIP) found that the project had resulted in lost revenue for the Mozambican government and thus the expected benefits were not fully realised. The question that then arises is the extent to which the benefits from the project have been internalised by Sasol and or the South African Government.
This paper (like the briefing note for Oxfam) addresses the impact of the gas project on Sasol and South Africa by considering the prices that South African customers paid for Mozambique gas; the economic benefits to South Africa, including to the Government of South Africa; the economic benefits flowing to Sasol from the Pande Temane project and the structure of the regulated price cap including applicable price tariffs. The analysis shows that there are very substantial benefits accruing to Sasol in the form of high profits resulting from the low cost of the Mozambican gas and the high prices that it was allowed to charge by the regulator, NERSA.
Keywords: natural gas, regulation, lobbying, monopoly
JEL Classification: D72, L1, L43, L51, L71
Suggested Citation: Suggested Citation