26 February 2013
Govt Encouraged Solid Energy’s Expansion But Never Required A Business Case
The National Government encouraged Solid Energy expansion plans but never required it to submit a business case for its
ambitious but ultimately futile $2 billion lignite developments, the Green Party said today.
Information released under the Official Information Act confirms that Solid Energy never provided a business case for
the proposed multi-billion dollar lignite expansion to Treasury or the shareholding ministers.
“The National Government failed to provide adequate oversight of the ambitious expansion plans of the state’s coal
miner,” said Green Party Co-leader Dr Russel Norman.
“The shareholding ministers and Treasury’s Crown Ownership Monitoring Unit are responsible for providing this oversight
but they manifestly failed.
“But more than that, John Key was actively encouraging the expansion of Solid Energy’s lignite plans.”
John Key said to an Invercargill audience on 3 June, 2011 that, ‘At the moment companies like Solid Energy are growth
companies and we want them to expand in areas like lignite conversion’.
“It is desperate stuff to now blame Solid Energy’s failings on a speech from Trevor Mallard in 2007,” said Dr Norman.
“Like South Canterbury Finance before it, the National Government’s complacency has cost taxpayers hundreds of millions
of dollars.
“National is failing at the basics of good economic management and oversight.”
Dr Norman also questioned the Government’s attempt to paint Solid Energy’s demise as a failure of its clean energy
investments.
“The majority of Solid Energy’s asset write-downs (or impairments) were dominated by its investments in underground
mines, as reported by Solid Energy’s CEO when presenting the 2012 Annual Report,” said Dr Norman.
“The closure of the Huntly and Spring Creek mines as a result of falling coal prices and the high New Zealand dollar
have had a disproportionately bigger negative impact on Solid Energy’s bottom line than its investments in clean energy.
“In fact, the National Government’s decision to end the Biodiesel Grant then remove minimum biofuel requirements
destroyed the business case for Solid Energy’s prior investment in biodiesel.”
Link to Treasury’s Official Information Act response:
Link to John Key’s reported statements on Solid Energy’s expansion plans:
ENDS