Gas rollout cop out


TASMANIAN homeowners who don't have natural gas pipelines in their streets are unlikely to get access to piped gas as an alternative power source soon.
The State Government yesterday reneged on the long-awaited State 2B expansion of the natural gas rollout after April this year.
Instead of giving 100,000 Tasmanian homes access to natural gas as promised, just 40,000 will be able to connect up to nearby pipelines.
The decision follows the payment of $56 million over the past five years by the Government to private company Powerco, to subsidise its $80 million cost of laying 1300 kilometres of natural gas pipelines from north-east Tasmania to Hobart and the north-west region.
Despite the Government subsiding 70 per cent of all costs, just 1,555 Tasmanian homes have chosen to connect to natural gas.
However, the service has proved a boon for large Tasmanian corporations, with 280 businesses now using natural gas as their major power source.
By April when the Stage 1 and 2A gas pipeline project concludes, about 40,000 Tasmanian homes will have access to natural gas.
But few have taken up the opportunity, deterred by prices that are nearly twice the cost of gas sold in Victoria.
The high transmission costs, overheads and management fees charged by Powerco and the owner of the Bass Strait gas pipeline, Alinta, have been blamed for Tasmanians' reluctance to switch to natural gas. About $5 million a year is paid by Powerco to Alinta toward the cost of the $450 million undersea pipeline bringing natural gas to Tasmania from the Victorian Longford plant.
The government's decision yesterday to quit subsidising the laying of new natural gas pipelines means thousands of homes on Hobart's eastern shore and in the fast-growing Taroona/Kingston/Margate district, will be deprived of natural gas for a long time.
A decision to commit to the next expansion phase had been expected sometime during the past 18 months, but the government has opted out because the take-up by homeowners has been minimal. Acting Economic Development minister Steve Kons (the Premier remains on holiday), admitted yesterday that fewer homes had switched to gas than initially predicted.
But Mr Kons claimed the ambitious project had been a "strong achievement" despite the decision not to extend the expansion of the gas network as expected.
"We have achieved more than we set out to do and the financial advantages are being delivered to business and domestic consumers sooner than even we expected," Mr Kons said.
But he said any future expansion or new gas connections to homes and residences were unlikely without an overwhelming business and commercial imperative.
Liberal Shadow Minister for Economic Development, Jeremy Rockliff, condemned the dumping of the expansion phase and claimed it was evidence of government mismanagement.
"Such a massive subsidy would never have been needed had Labor not completely botched the initial tender process," Mr Rockliff said.
"Today's announcement represents not only another broken Labor promise, but further evidence of the government's inability to manage major projects."