The Gisborne Times PUBLISHED DAILY. THURSDAY, JUNE 7, 1917.

Gisborne Times, Volume XLVIII, Issue 4579, 7 June 1917, Page 4

The Gisborne Times PUBLISHED DAILY. THURSDAY, JUNE 7, 1917.

it- would be interesting to know the

grounds upon 2 which the Borough Council'

Proposal to Acquire the Gasworks.

lias decided" not to move in the direction of acquiring the local gas works until the last year of the option which has some four years vet to run. Perhaps the chief reason may be that this is not considered to be a proper time to embark upon a large capital outlay. That .however, need not be an insuperable difficulty. If the Borough could acquire these works at a reasonable figure it might be possible to arrange with the shareholders of the company, or the great bulk of them, to take up debentures in return for their shares. But there is room for the suspicion that the “City Fathers” may believe that if they delay the purchase of the gasworks they will bo able to acquire it during the last year of the option at a much lower price than would be fixed as to-day’s valuation. If such should prove to bo the real position of affairs we are afraid that it is likely to prove a very mistaken policy, for the market value of all such plant and materials may continue to increase for some years even although the war may be got through some time next year at the latest. We say unhesitatingly that the Borough should own the local gasworks in addition to their electrical plant. It is utter foolishness that these works should be independently owned, for the ratepayers m the end will have to pay all losses on account of the insane competition which is bound to result on account of the fact that the Borough has not both enterprises under its control. Let us look at the matter from this particular point of view. If the BorougTT ran both concerns it is certain that both services would not be extended to what for a time must prove non-paying localities. When an extension to any particular locality was desired, the Borough would, if it owned both utilities, make the extension of one service do until the circumstances justified the extension of the oilier service: Such a course of action would undoubtedly lead to the temporary saving of a great deal of capital. We do not pretend to know whether the shareholders in the gas company are desirous of parting with their concern, but if the Borough decided to go in for the venture they would have no alternative in the matter, and the only question which would have to ho settled would be that of price, which, in the event of a dispute, would be settled for both parties by arbitration. Roughly speaking, the company has, according to its records (so one of its shareholders informs this journal) assets worth about £05,000, on which there is indebtedness to the extent of between £SOOO and £OOOO. If the Borough could acquire the concern for, say, £7s,ooo—which may or may not ultimately prove to he somewhere near the mark—the annual capital charge should not be much above £4OOO. The net profits of the concern last year were over £3OOO, and the previous year, when the cost of

materials was much lighter, they tot- I ailed over £6OOO. But let us take it J that the company will this year, in j view of the increased business and the reduction in the amount allowed to consumers by way of discount, earn, say, £3500. If the property were owned by the Borough the net profits would be very much greater. In the first place the Borough would not have to pay taxes of any kind, and this item as far as the company is concerned cannot be far short of £IOOO. Then, again, one clerical staff, with but slight augmentation, woull be able to handle both businesses and in this way perhaps a further £SOO could be saved. If "e aie right in this regard it would mean that under Borough control the gasworks would earn a net profit of at least £SOOO per annum. This shows that the acquisition of the concern for as much as £75,000 or even a higher sum would prove a good investment for the Borough. But that is not all. If the Borough owned the local gasworks it would have assured to it a large supply of tar at a minimum value for use on its streets as well as for sale to the public. If the Borough could acquire the property for a smaller sum then we have used for the purposes of this article so much the better. The outstanding • feature of the whole matter is that } business prudence dictates that the j Borough should control both concerns, in which event there should be no • overlapping with consequent waste of capital and unnecessary expenditure 5 both for interest and on working expenses. We therefore think that the matter of the acquisition of the local • gasworks should receive further and immediate consideration with a view i to seeing if it bo not possible to hit j upon financial arrangements for purchase which would be acceptable to | j both parties.