South African petrochemicals group Sasol on Tuesday argued that a windfall tax on the company would not achieve sustainably lower fuel prices but would “hamstring a South African company against its multinational competitors”.
The group was presenting oral evidence to a special task team appointed by the National Treasury to look into possible reforms to the fiscal regime applicable to the liquid-fuel energy sector.
Sasol also argued that windfall taxes will not support government’s stated fiscal and energy policy objectives rewarding beneficiation and protecting consumers through providing energy security.
The group further contended that Sasol did not meet the criteria for windfall profits as posited by the task team, charging that its net economic returns were modest compared with local mining and industrial companies and multinational oil majors.
It added that the group’s contribution to the South African economy was strong — and set to increase. If the costs were weighed against the benefits, it said, the creation of Sasol had represented a “handsome return on investment”.
Government received average annual taxes of R4-billion from the group, which was the country’s biggest taxpayer and provided jobs for about 140Â 000 South Africans, and the consumer had benefited by savings in foreign exchange of R27-billion per annum — without which fuel would have been more expensive.
“The country has benefited through the creation of a petroleum and chemicals industry, creating technology, jobs, economic growth and skills,” Sasol added.
The synthetic fuels group said it had plans for further expansions in South Africa. — I-Net Bridge