Tax change threatens gas project

THE Australian federal govern ment’s proposed abolition of accelerated depreciation may have thrown another spanner in the works of Australian Gas Light Co’s plans for a A 53.7 billion natural gas pipeline from Papua New Guinea to Queensland.

AGL managing director Len Bleasel, speaking at the company’s annual general meeting last month, said the elimination of accelerated depreciation in the new tax proposal would place significant pressure on AGL’s decision whether or not to pro ceed forward with the project.

“One can only read into the pro posed tax package that there are suffi cient comfort words that would encourage us to believe that the accel erated depreciation would still be retained by that pipeline,” Bleasel said.

“It’s an asset builder for the nation and I would be more than disap pointed if they did not allow the accel erated depreciation ... we have not got anything formally from them.”

He said if the accelerated depre ciation was not allowed it did not mean the pipeline would be scrapped.

The proposed 2100 km pipeline is to be built in conjunction with AGL’s joint venture partner Petronas of Malaysia.

Bleasel said AGL had factored in accelerated depreciation when early economic studies into the project were completed.

He also re-raised the spectre of future coal-fired power stations plac ing the project at risk.

“The PNG pipeline has many elements to it before it’s commercially successful,” he said. “My very clear message to the federal government and to the Queensland state government is that there are two outstanding issues, one, the issue of accelerated deprecia tion and the other one is the success or otherwise of coal-fired power stations being built in Queensland.”

Bleasel in September called for a delay in approvals for new coal-fired power plants in Australia pending an in-depth study of the ramifications of

different types of electricity genera tion.

AGL’s annual report, released September, noted that the pipeline was continuing to build momentum.

“A number of regulatory hurdles have been cleared, sufficient gas reserves have been committed to the project, very competitive tariffs on the

pipeline have been offered and support from the PNG, Queensland and Feder al governments is strong,” the annual report said.

AGL said all that stood in the way of the pipeline was the commit ment of foundation customers and final regulatory approval. (Post Courier) ■