10 December 2015

New measure to share costs of maintaining NZ’s oil security equitably

The Ministry of Business, Innovation and Employment has announced details of a funding mechanism which transfers the cost of safeguarding New Zealand’s oil security from general taxpayers to fuel users.

The measure was introduced with the passing of the Energy (Fuels, Levies, and References) Amendment Act in February 2015. Following a period of public consultation, the government has set the levy rate that will help fund New Zealand’s oil stock-holding obligations in the Energy (Petroleum or Engine Fuel Monitoring Levy) Regulations 2015.

“Under an existing agreement with the International Energy Agency (IEA) to ensure a secure oil supply, New Zealand is obliged to hold oil stocks equivalent to at least 90 days of net imports,” says Jamie Kerr, Manager of Energy Markets Policy.

“However, the cost of meeting this obligation – which until now was funded by taxpayers – has increased over time.

“To establish a fairer form of funding, the costs of meeting our IEA obligations will now be met by the Petroleum or Engine Fuel Monitoring Levy (PEFML).”

The PEFML is an existing levy that has funded liquid fuel data collection, safety and monitoring, and will now also include our international oil security costs. It will continue to be collected from consumers of petrol, diesel, ethanol and biodiesel.

The levy is set at a transitional rate of 0.045 cents per litre (equal to the current rate of collection for the PEFML) and will apply from 23 February 2016 to 30 June 2016. A new rate of 0.2 cents per litre will then apply from 1 July 2016.

ENDS

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