National Energy Regulator of South Africa and Another v PG Group (Pty) Limited and Others

NERSA, the statutory regulator under the Gas Act 48 of 2001, approved Sasol Gas (Pty) Ltd’s applications for maximum gas prices and transmission tariffs on 26 March 2013 after determining that there was inadequate competition in the piped-gas market. Sasol elected to have its maximum gas prices determined using a ‘basket of alternatives’ methodology rather than a cost-based ‘pass-through’ approach. The approved prices resulted in substantial increases for large industrial gas consumers, including PG Group and others. These consumers challenged NERSA’s Maximum Price Decision and Tariff Decision under PAJA, alleging irrationality and unreasonableness. The High Court dismissed the review due to unreasonable delay, holding that the pricing methodology should have been challenged earlier. The Supreme Court of Appeal overturned that decision, reviewed and set aside both approvals as irrational, and ordered retrospective pricing. NERSA and Sasol appealed to the Constitutional Court.

Leave to appeal was granted. The appeal was upheld in part. The Supreme Court of Appeal’s order setting aside NERSA’s transmission tariff decision was reversed. The setting aside of the Maximum Price Decision was confirmed. Paragraph 2(a) of the Supreme Court of Appeal’s order was substituted to review and set aside only NERSA’s approval of Sasol’s maximum gas prices and trading margin. NERSA and Sasol were ordered to pay the respondents’ costs.

The case clarifies the reviewability of regulatory pricing decisions under PAJA and confirms that policy guidelines or methodologies do not have to be set aside before an individual administrative decision applying them may be reviewed. It underscores judicial deference in complex economic and regulatory decision-making while affirming that such decisions remain subject to rationality and reasonableness review. The judgment is significant for administrative and energy regulation law in South Africa.