Transnet to appeal R6bn court award to Sasol and TotalEnergies

Transnet Pipelines’ multipurpose pipeline. SUPPLIED.

Transnet Pipelines’ multipurpose pipeline. SUPPLIED.

Published Jun 20, 2024


Transnet has said it will be appealing the High Court judgement that it must pay Sasol and TotalEnergies more than R6 billion for the transportation of crude oil on their pipeline from a historic agreement, which as cancelled in 1991 allowing for neutrality tariffs.

Transnet today said the Tuesday judgement had enormous implications not only for the public purse, but also for Transnet’s ability to discharge its obligations under the applicable legislation and its licence conditions.

Damages in the amount of R3.9bn plus interest amounting to approximately R2.3bn were awarded to Sasol Oil.

TotalEnergies, was awarded damages of R2.1bn, as well as interest on various amounts adjudicated by the court.

Transnet said the agreement, which has since been cancelled, had as its central feature that, in calculating the tariff from Durban to the Natref crude oil refinery located in Sasolburg, the so-called “neutrality principle” would apply in terms of which Natref would neither be advantaged nor disadvantaged by its inland location.

“Transnet intends to appeal the judgment and is in the process of instructing its legal team accordingly,” it said in a statement.

The dispute has its roots in a 1967 agreement between the then South African government and Total, which established an inland crude oil refinery at a time when coastal refineries were struggling to meet inland demand.

To secure the participation of Total in the inland refinery Natref, the government put in place a pipeline tariff structure that would match the costs of a coastal processing facility.

Sasol, which was set up as a state-owned business in 1950 and privatised in 1979, holds 63.64% of Natref, with TotalEnergies holding the remainder.

Transnet, through its business unit Transnet Pipelines, transports crude oil for both Sasol Oil and TotalEnergies Marketing from Durban to the Natref crude oil refinery located in Sasolburg.

Sasol Oil and TotalEnergies hold 63,64% and 36,36% respectively of the shares in Natref.

In 2017, Sasol Oil followed TotalEnergies in instituting legal action against Transnet for damages arising from Transnet’s breach of its obligation to set pipeline tariffs for conveyance of crude oil in terms of an agreement that had been entered into between the parties in 1991.

The result of the breach was that Transnet overcharged Sasol Oil for the conveyance of crude oil over a number of years.

The litigation between the parties has been ongoing for years and a number of issues in the matter have been determined by the High Court, Supreme Court of Appeal and the Constitutional Court.

Transnet said the the judgment handed down by the High Court concerned the application of the neutrality principle in the face of uncontested evidence that Total and Sasol made vast transport profits during the claim period.

“Transnet is disappointed by the judgment  in the action instituted by Total and Sasol for the recovery of amounts paid to Transnet for the conveyance of crude oil in Transnet’s crude oil pipeline from Durban to the Natref refinery in Sasolburg, which is jointly owned by Total and Sasol," it said.