25 JULY 2013www.ntnews.com.au
The future of the gas to Gove pipeline may once again be in doubt
Edited by : AL CIRCLE
2 min read
The future of the gas to Gove pipeline may once again be in doubt as nobody wants to pay for its construction.
The NT Government gave up a decade's worth of cheap public gas to mining giant Rio Tinto in February after the company threatened to shut the Gove alumina refinery and sack 800 people. But Rio subsidiary Pacific Aluminium does not just need the cheap energy, it needs a pipeline to get it there.
Cost estimates vary from $500 million to $900 million.
In February, industry analysts said taxpayers would be asked to pay as the refinery was running at a loss.
At the time Pacific Aluminium chief executive Sandeep Biswas denied this would be the case.
"The private sector will fully fund gas to Gove," he said.
Australia's biggest pipeline company APA Group is now in talks with Pacific Aluminium to build and operate the pipeline - but they don't want to pay for construction.
"We'll get involved with owning or operating," APA Group managing director Mick McCormack said.
"Pacific Aluminium control the project, they're arranging to have the pipeline built."
But Pacific Aluminium appears have changed its tune.
"Given the commercial arrangement is not yet complete, we are not in a position to comment at this time," company spokesman Anthony Havers said.
Mr McCormack said building costs were usually recouped through a margin on the sale of gas to customers over a long-term contract of up to 30 years.
But Pacific Aluminium only has 10 years worth of gas and parent company Rio Tinto has already announced its intentions to sell the project, increasing the uncertainty.
The Federal Government will underwrite the pipeline loans, guaranteeing the project despite the short lifespan.
But when asked who would actually borrow the money to pay for it, Mr McCormack said that was a question for Pacific Aluminium.
The NT Government gave up a decade's worth of cheap public gas to mining giant Rio Tinto in February after the company threatened to shut the Gove alumina refinery and sack 800 people. But Rio subsidiary Pacific Aluminium does not just need the cheap energy, it needs a pipeline to get it there.
Cost estimates vary from $500 million to $900 million.
In February, industry analysts said taxpayers would be asked to pay as the refinery was running at a loss.
At the time Pacific Aluminium chief executive Sandeep Biswas denied this would be the case.
"The private sector will fully fund gas to Gove," he said.
Australia's biggest pipeline company APA Group is now in talks with Pacific Aluminium to build and operate the pipeline - but they don't want to pay for construction.
"We'll get involved with owning or operating," APA Group managing director Mick McCormack said.
"Pacific Aluminium control the project, they're arranging to have the pipeline built."
But Pacific Aluminium appears have changed its tune.
"Given the commercial arrangement is not yet complete, we are not in a position to comment at this time," company spokesman Anthony Havers said.
Mr McCormack said building costs were usually recouped through a margin on the sale of gas to customers over a long-term contract of up to 30 years.
But Pacific Aluminium only has 10 years worth of gas and parent company Rio Tinto has already announced its intentions to sell the project, increasing the uncertainty.
The Federal Government will underwrite the pipeline loans, guaranteeing the project despite the short lifespan.
But when asked who would actually borrow the money to pay for it, Mr McCormack said that was a question for Pacific Aluminium.
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