Auditor-General won't investigate LNG yet but 'remains interested' in Govt plans

The Auditor-General will not launch an inquiry into the Government's plans to build an LNG terminal, but says his office "remains interested" in the project.

Link: https://www.rnz.co.nz/news/eyJhbGciOiJIUzI1NiJ9._f0.YIZs2-J2FpwgcBcJJb29s1vXmFAWHLh_p1oUyv-l-RA/environment/1682609%2Fauditor-general-won-t-investigate-lng-yet-but-remains-interested-in-govt-plans The Auditor-General will not launch an inquiry into the Government's plans to build an LNG terminal, but says his office "remains interested" in the project.

His letter declining the inquiry reveals officials were still working on the case for LNG, including who would pay for it.

Consumer and climate groups requested an inquiry in August over what they said were concerns about transparency and value for money.

The signatories - including Consumer NZ, Lawyers for Climate Action and the Sustainable Business Network - said the process was being "rushed towards an artificial deadline" without properly considering the alternatives.

The Government confirmed in June it was proceeding with plans for a $1 billion-plus facility in Taranaki, saying importing liquefied natural gas was the best option to see off a "dry year" risk while more renewable energy was developed.

As late as last month, Energy Minister Simeon Brown said a contract could still be signed during the election campaign, so the terminal could be up and running in time for winter 2028.

However, following a Cabinet committee meeting on 23 September, the Government said it would no longer try to sign a contract before the election.

Energy Minister Simeon Brown has said a contract could still be signed during the election campaign.

In his letter declining an inquiry, Auditor-General Grant Taylor said his office had met with Ministry for Business, Innovation and Employment (MBIE) officials.

"From those discussions, we understand that work is still underway to update and review the financial, economic, and strategic case for an LNG fuel solution and to identify a preferred model or provider," he wrote.

That included "understanding who would bear the costs and how any cost-recovery arrangements would work".

The Government originally said the costs of the terminal - which will be built by a third-party provider and leased back - would be covered by a levy on all electricity users.

However, it scrapped that plan in June and said details on alternative funding would be revealed "in due course".

Officials were also still working on the implications for electricity prices, security of energy supply, investment incentives, and other sources of energy, Taylor said.

"We will remain interested in this process as it progresses but, as the Government is yet to decide the approach it will take and select a provider, we do not propose carrying out inquiry work now," he wrote.

"Our specific interests, once a model has been decided and/or a provider selected, will be related to demonstrating value for money." That included whether the "expected costs, benefits, risks, and beneficiaries were clearly understood, including who would bear the costs and how any cost-recovery arrangements were justified".

MBIE also needed to show that alternatives to LNG had been identified and assessed on a comparable basis, that its preferred approach was supported by robust analysis, and that the scale of public resources being used was proportionate to the problem.

"Given the high public interest, it is important that the public can be as informed as possible (bearing in mind commercial sensitivities) about the reasons for the decision the Government ultimately makes," Taylor concluded.