More sales after Petrocorp?

Press, 25 September 1987, Page 4

More sales after Petrocorp?

By BRENDON BURNS, political reporter Plans to sell Petrocorp could create a gas and oil monopoly with huge tax benefits, said Labour’s member of Parliament for Sydenham, Mr Jim Anderton, yesterday. Mr Anderton said that the privatisation of the State company could signal further sales, such as Air New Zealand and the >• Rant of New Zealand. ■'< His comments follow up .Hi debate in the Labour caucus yesterday in which the Minister of Finance, Douglas, explained the move to *ll the GovernfMnaiaing 70 per cent Share in Petrocorp. L . e«tal(Wrdariiniag to outHne the caaatadbcussion,

company’s accumulated tax losses of nearly $1 billion, which Mr Douglas wants transferred to any new owner. He said the tax benefit is reflected in the company’s share price, but Mr Anderton said that if the present price of Petrocorp’s shares (also about $1 billion), was paid for the company, the purchaser could theoretically buy it for nothing by writing off the accumulated tax losses against any profits. He wants to see this addressed in any sale of Petrocorp shares by increasing the share price to cover the tax benefit “There should not be a tax windfall for'some cor-, poration buying the company for tax purposes.”

Mr Anderton also had philosophical concerns about the sale of assets

for short-term financial gains.

Mr Douglas has said the sale of Petrocorp is in lieu of S.O.E. asset payments, delayed by asset negotiations and the Court of Appeal ruling on Maori land affected by corporatisation. The money will be used in an effort to produce the fiscal surplus forecast in last July’s Budget.

Mr Anderton said the sale had to be looked at in a time frame longer than one year. Inevitably the sale would mean Petrocorp would have a large corporation with a controlling interest Brierley Investments had already expressed such an interest It holds 15 per cent of Petrocorp. "The problem with that is that Brierley already has investmentns in the (

gas industry through a number of companies.” With a controlling interest a monopoly in gas and oil could be created, with power to set prices to its advantage, said Mr Anderton.

Announcing the sale of Petrocorp, Mr Douglas said that if a company bought it and dominated the gas industry, this was not important as it was only one sector of the energy field. It would still have to compete with the likes of Electricorp.

Mr Anderton did not accept this argument “If there were a lot of electric-powered cars around I might have agreed with it,” he said.

Petrocorp is involved in supplying alternative motor fuels, as is Brierley. Mr Anderton said, however, that the sale of ft

Petrocorp to overseas interests would be even worse than creatingg an internal monopoly. This would mean foreign interests could control the destiny of an essential New Zealand industry. (Mr Douglas has indicated foreign buyers will be considered.) The privatisation of Petrocorp could also open the way for further such moves by the Government, Mr Anderton said. “The Bank of New Zealand and Air New Zealand are sitting there and these patterns of financial transfers tend to gain momentum,” he said.

Mr Anderton has previously questioned the sale of shares in BNZ. He said he intended to keep Petrocorp and other similar suggested moves under constant scrutiny.