Motunui shares sale criticised by M.P.

Press, 8 January 1983, Page 2

Motunui shares sale criticised by M.P.

PA Wellington The only advantage to the Government of selling its shares in the Motuaui synthetic fuels project was to make its own accounts look better, said Labour's spokesman on energy. Mr D. F. Caygill. yesterday. the proposal to sell the shares, to be put to the Cabinet by the Minister of Energy. Mr Birch, was "essentially irrelevant." Mr Caygill said. "It will have little impact on the economy and will provide few benefits to those investors who choose to become involved." he said.

The $2OOO million project. New Zealand's biggest single venture to date, is being built by the Synthetic Fuels Corporation. which is owned 75 per cent by the Government and 25 per cent by the Mobil Corporation of New York. Mobil is providing the technology to convert the natural gas to petrol. The special nature of the processing arrangements had to be borne in mind. Mr Caygill said. "The corporation will not own the initial gas or the final gasolene — the Crown will at all limes. What the corporation will do is process Maui gas into petrol in return for a fee calculated to yield a guaranteed rate of return on shareholders' funds, after tax. of 16 per

cent. “That is what subscribers to the corporation will receive on their money - 16 per cent." Whether the sale of shares proceeded, the real risk of profit or loss from the venture would remain with the Crown. Mr Caygill said

"This is because the ultimate price of synthetic petrol will be based not on its production costs, but on the price of petrol refined at Marsden Point, which is based, in turn, on the world price of oil." Mr Caygill said. "If the price of oil shoots up again, the Government will make a packet at the expense of the New Zealand motorist.

"If the price of oil falls or stays static in real terms, the Government may be hardpressed to pay the processing fee. the cost of gas under the Maui take-or-pay agreement, and the energy resources levy on the gas. "The only advantage to the Government in selling off its shares in the project is to make its own accounts look better." Mr Caygill said.

The $B2 million shareholding it planned to recover from the public would be belter spent on projects in the agricultural or manufacturing sectors which showed a better long-term return and generated more jobs than the synthetic fuels project. he said.