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From a developmental to a regulatory state? Sasol and the conundrum of continued state support

Pamela Mondliwa and Simon Roberts

International Review of Applied Economics, 2019, vol. 33, issue 1, 11-29

Abstract: Sasol was established and supported by the apartheid state in South Africa for its strategic position as a liquid fuel and chemical producer. The evolving government treatment of Sasol through various policy measures, and Sasol’s changing corporate strategy under a liberalised economy, represents a key part of South Africa’s transition under democracy from 1994. The article takes Sasol as a case study of industrial policy, regulation and business strategy. We analyse the terms on which the post-apartheid government continued to support Sasol along with the decisions to release Sasol from obligations to repay subsidies it had received and not to impose a tax on windfall gains. We then evaluate the regulatory regime for fuel and gases, the advantages that it bestowed on Sasol, and the ability of competition authorities as regulators of last resort to address Sasol’s entrenched market position. Sasol’s impact on downstream diversified industrial sectors, which rely on it for inputs, is assessed as part of the bigger questions about the failure of South Africa to develop diversified manufacturing capabilities over the last 25 years. The article draws conclusions relating to the political economy of industrial policy, regulation and competition law in addressing Sasol’s entrenched position.

Date: 2019
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DOI: 10.1080/02692171.2019.1523845

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