Sasol Oil (Pty) Ltd v National Energy Regulator of South Africa and Others (059715/2023) [2025] ZAGPPHC 919 (2 September 2025)

Key Facts

Issues

• The applicant argued that NERSA's adoption of the 2011 rolled-in methodology for the 2023/24 tariff determination was inappropriate and not a binding legal rule, rendering the decision unlawful under the Promotion of Administrative Justice Act (PAJA) and the Petroleum Pipelines Act (PPA). The court found that the methodology was a guideline and NERSA's failure to adjust for differences between pipelines was unlawful.
• The applicant argued that NERSA disregarded their submissions and the Genesis report, which highlighted the need for separate tariffs. The court held that NERSA's failure to adequately consider these inputs rendered the decision irrational and in violation of the PPA's requirement for fairness and transparency.
• The applicant contended that NERSA's imposition of a uniform tariff across both the Crude Oil Pipeline (COP) and Multi-Product Pipeline (MPP) was unfair and discriminatory, as the PPA requires tariffs to be fair and non-discriminatory. The court agreed, noting significant operational and cost differences between the pipelines, which NERSA failed to address, leading to an irrational and unfair decision.

Holdings

• The court held that NERSA's failure to distinguish between the Crude Oil Pipeline (COP) and Multi-Product Pipeline (MPP) and apply separate tariffs rendered the decision unfair under section 28(2)(a)(ii) of the PPA. NERSA's reliance on the 2011 rolled-in methodology, which was a non-binding guideline, was deemed irrational and unreasonable. The court also found that NERSA disregarded the applicant's submissions and failed to ensure fairness for COP users.
• The court ruled that NERSA's decision was unreasonable due to the imposition of a uniform tariff on an unconnected pipeline system. The failure to consider relevant material factors, such as the distinct nature of COP and MPP operations, rendered the tariff irrational under PAJA and the PPA.
• The court determined that NERSA's adoption of the 2011 rolled-in methodology for the 2023/24 tariff was misdirected, as it was not a binding legal rule and failed to meet the requirements of section 28 of the PPA. The methodology's application ignored material differences in pipeline costs and operational characteristics.

Remedies

• The decision made by the first respondent on 23 February 2023, approving tariffs in respect of the second Respondent's petroleum pipeline system (the impugned decision), is reviewed and set aside on the grounds set out in the founding affidavit.
• The impugned decision is remitted back to the first respondent for reconsideration.
• The first respondent is directed to pay the costs of this application.
• No order as to costs is made against the second to tenth respondents.

Legal Principles

• The court evaluated compliance with section 28 of the Petroleum Pipelines Act (PPA), which requires tariffs to be fair, non-discriminatory, and based on a systematic methodology. The decision was set aside for failing to meet these statutory requirements.
• The court applied judicial review principles under section 6(2)(f)(ii) of the Promotion of Administrative Justice Act (PAJA), emphasizing that an administrative decision must be rationally connected to its purpose, the empowering provision, and the information before the administrator. This standard was used to evaluate NERSA's tariff approval decision.

Precedent Name

• Democratic Alliance v President of the Republic of South Africa and Others
• National Energy Regulator of South Africa and Another v PG Group (Pty) Ltd and Others

Cited Statute

• Promotion of Administrative Justice Act (PAJA) - sections 6(2)(b), 6(2)(f)(i)
• Petroleum Pipelines Act (PPA) - sections 28(1), 28(2)(a)(ii), 28(2)(a)(i)-(vi)
• South African Transport Services Act
• National Energy Regulator Act - section 3

Judge Name

Passage Text

• NERSA's failure to recognise these differences amounts to non-compliance with section 28(2)(a)(ii) of the PPA, rendering the tariff unfair to the applicant.
• It is unreasonable for NERSA to impose a single pipeline system tariff based on the 2011 rolled-in approach. The COP operates upstream of refining, whereas the MPP is downstream, and the two pipelines are not physically connected.