Shares in petrochemicals group Sasol slumped 8,3% on Wednesday, following Finance Minister Trevor Manuel’s unveiling of an investigation into a windfall tax.
Sasol shares were trading at R227,50 shortly before the Budget speech but then fell to R209.
The Treasury’s Budget Review announced that, owing to the substantial windfall gains reaped by Sasol and PetroSA in times of high crude-oil prices, a task force was being appointed to investigate a possible windfall tax on additional income.
The Budget Review said the synthetic fuels industry was developed with extensive government support in the form of tariff protection through the Equalisation Fund, which was created under the Central Energy Fund Act of 1977. Funds were collected from motorists, using the fuel levy to compensate the industry in times of low oil prices.
The Treasury noted: “Given the price determination process [import parity pricing and partial regulation], the industry is in a position to reap substantial economic rents when crude-oil prices are high. Such windfall gains should be shared with the public.”
Last year the Mail & Guardian reported that Sasol had benefited to the tune of R6-billion, through the Equalisation Fund.
Sasol responded in a statement stating that it was concerned that its ability to reinvest profits in its operations will be compromised if windfall taxes are imposed. Sasol spokesperson Johan Van Rheede said: “In terms of the then prevailing agreements, Sasol had repaid all of its obligations to government, and was confident that it had fully complied with all of the conditions of the tariff protection dispensation.”