Transnet plans to appeal the over R6 billion damages awarded by the Gauteng High Court to Sasol Oil and TotalEnergies for allegedly overcharging for the use of its fuel pipelines.

Transnet Pipelines transports crude oil for Sasol Oil and TotalEnergies from Durban to the Natref crude oil refinery in Sasolburg. Sasol Oil and TotalEnergies hold 63,6% and 36,4% respectively of shares in Natref.

The High Court awarded Sasol Oil R3,9 billion and TotalEnergies R2,1 billion, plus interest, following the prolonged court battle over Transnet Pipelines tariffs. Sasol Oil said in a statement that interest owed on the amount was approximately R2,3 billion.

This comes after Transnet demanded R815 million from Sasol and R461 million from TotalEnergies for pipeline usage services.

The amounts charged are linked to National Energy Regulator of South Africa (NERSA) tariffs.

In 1967, an agreement was signed to set the tariff and subsequent increases in the price of transporting fuel for TotalEnergies to the inland Natref refinery. This agreement was part of government's protectionist measures to secure energy supplies during sanctions at the time. The agreement was based on a “neutrality principle”, which meant that companies should not be advantaged or disadvantaged by their distance from the coast.

Transnet terminated the agreement in 2020, citing preferential treatment given to Sasol and TotalEnergies over other companies such as BP, Shell and Caltex (now known as Altron). Transnet also argued that changes in the law, specifically NERSA determining tariffs, made it legally impossible to continue the agreement.

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”, Sasol said in a statement. “The result of the breach was that Transnet overcharged Sasol Oil for the conveyance of crude oil over a number of years.”

In the punitive ruling handed down on June 18, Transnet was ordered to pay costs including three counsels, the wasted costs of a postponement in October and the fees of TotalEnergies’ expert.

Transnet Group Executive Michelle Philips said the company was disappointed by the judgement and intended to file an appeal.

“The judgement handed down by the High Court concerns the application of the neutrality principle in the face of uncontested evidence that Total and Sasol made vast transport profits during the claim period,” Phillips said.

“The judgement has 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,” she said.