Gas privatisation go-ahead

The Government had decided to proceed with privatisation of the State's gas industry.

"The lessons clearly learnt from the Longford gas explosion is that the current producer monopoly leaves the State vulnerable to supply interruptions," the Premier, Mr. Kennett said.

He said privatisation of the Victorian gas businesses would provide a strong impetus to an integrated national pipeline system that will promote growth in interstate trade in gas, thereby increasing wholesale gas market competition and improving diversity of supply.

Victoria is now the only State where the gas industry remained largely publicly owned.

The Government had also legislated to peg prices below the rate of inflation so that by 2001:

* savings of 9% for residential consumers will be achieved, at an average saving of $45 per household; and

* small industrial customers will save 20% - an average real saving of $290 per business.

Additional savings on a similar scale can also be expected as a result of ongoing retail competition and the continued regulation of distribution and transmission charges.

The Treasurer, Mr. Stockdale said privatisation would also promote the development of an integrated energy market comprising electricity, gas and other products and services and increase innovation and investment in new technologies.

Competing private firms are also likely to extend natural gas reticulation to more country areas. Boral Energy in Mildura and Texas Utilities in East Gippsland are already planning extensions to the grid.

The sale of the gas businesses will proceed immediately.  The three gas distribution/retail companies -- Kinetik/Westar, Ikon/Multinet and Energy 21/Stratus -- and Transmission Pipelines Australia are expected to be sold by the first half of next year.

Mr Stockdale said the Government's concerns about the regulatory decisions on rate of return had eased since the fall of interest rates in international markets by three percent over the last 18 months.

The Government's plans to further diversify supply through the upgrading of the existing interconnect between the Victorian and New South Wales gas market, the development of an Underground Gas Storage facility, and the accelerated construction of a South-West pipeline would proceed independently of the privatisation.

(News Release, Office of the Premier, November 17, 1998)