P.M. shades oil sheikhs

Press, 14 December 1977, Page 1

P.M. shades oil sheikhs

PA Wellington. “You know how much the price of oil has increased — well, we have done a little better,” the Prime Minister ( Mr Muldoon) said of the new Comalco power agreement last evening. Mr Muldoon said the Government had won “a very substantial rise indeed” in the price Comalco would now pay for power for its Bluff smelter. Comalco would pay “several times” its previous charge, he said. The agreement will be formally signed in Wellington today. Satisfactory escalation proposals had been established, related to the world price of aluminium and the New Zealand bulk tariff, Mr Muldoon said. A minimum price related to the bulk tariff had been agreed on, and there had been a renegotiation of the terms on which Comalco would get an additional block of power for expansion of the smelter, he said. The term of the agreem e n t had been substantially reduced and new proposals on negotiation of an extended term had been agreed to.

"Altogether the agreement is very satisfactory from the point of view of New Zealand, and represents a fair reassessment of the enhanced value of the resource having regard to the new and greatly increased world value of energy of all kinds,” Mr Muldoon said. “I am sure that Comaico also believes that the agreement is a fair one even though the negotiations were long and, at times, difficult. “I trust that this new agreement will pave the way for the successful operation of the aluminium smelter for many years to come,” said Mr Muldoon.

Details of the new agreement were not disclosed. Agreement between the Government and Comalco came after the company put new proposals to the Government yesterday morning. Comalco’s chairman (Sir Donald Hibberd) had flown from Melbourne the previous evening in a lastminute effort to reach agreement. The Government had threatened to introduce legislation — which it had ready — to get a higher price for power if Comalco did not agree to its terms. Sir Donald said after the agreement was

reached that the Government’s original demand for a higher power price was unrealistic for Comalco to pay in a stern international market. “There has been a little give and take in the last few days,” he said. The new agreement would provide for a fiveyearly review, he said. “The first five-yearly review will show who is right and who is wrong.” Sir Donald said New Zealand government officials who had been arguing that Comalco would be in a position to pay the higher price the Government was seeking were not prepared to bet on their view.