Manufacturers question natural gas price

Press, 21 August 1985, Page 6

Manufacturers question natural gas price

Manufacturers say that the Government has opened the door to an unjustified big rise in charges for natural gas. The president of the Manufacturers’ Federation, Mr Earl Richardson, said this was unacceptable. Industry must have stability in its costs to be able to plan ahead, especially for exports. Mr Richardson said that the new wave of increases stemmed from a 30c a gigajoule increase to be applied by the Government from October 1 to cover underestimated costs of the Maui platforms and the take-or-

pay arrangement for Maui gas.

Manufacturers were not happy that the Ministry of Energy could supply no breakdown of this figure, but they accepted that some provision might be necessary.

“But what appals them is the opportunity being taken by the pipe-line authority, Petrocorp, to boost its margin in passing on that increase,” Mr Richadson said.

The federation understood that the city gate price Petrocorp wanted to charge gas supply authorities was $3.09 a gigajoule, which represented a 66 per cent

margin to Petrocorp. This compared with 51 per cent margin at present taken by Petrocorp. The 30c increase charged to Petrocorp was likely to be passed on at the city gate as a 73c increase. “If the Government accepts this sort of margin for its quango on top of its higher original charge its credibility is on the line,” Mr Richardson said. Instability of energy costs was creating havoc in industry’s projections and putting at risk employment and export earnings.