4 Oct 2013

Opposition parties demand inquiry into Solid Energy

10:16 pm on 4 October 2013

Opposition parties are calling for the Auditor-General to investigate how Solid Energy has landed in such a colossal mess.

The state-owned mining company has reported an after-tax loss of more than $335 million for the 12 months ending June.

It has written down the value of its assets by more than $215 million, and has also been hit with $102 million worth of restructuring and redundancy costs.

The state-owned coal miner has $381 million in debt and is in talks with its bankers to try to secure a deal to reduce it.

The company says it won't make any comment about the financial results until that deal is struck.

The results show the massive loss in the value of its assets due to a weaker coal market has reduced the Government's equity in the company by two thirds to $91 million.

Coal prices fell more than 40% in the 12 months to June, resulting in a 35% drop in revenues.

As a result, Solid Energy won't be paying a dividend to the Government.

Business analyst Rod Oram says Solid Energy has a future in New Zealand, but a much smaller future than its previous managers envisioned.

He says the company will struggle to make money, given how the international prices for coal have fallen.

Mr Oram says the Government should sell Solid Energy as soon as it's in better shape.

Opposition parties call for investigation

The Labour Party says the public deserves answers as to how the once-award-winning company has ended up a basket case.

Its state-owned enterprises spokesperson Clayton Cosgrove says the Auditor-General should now carry out a full inquiry because taxpayers deserve answers.

He says the Government has been both negligent and incompetent.

The Green Party is also calling for the Auditor-General to get to the bottom of the mess.

Both Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall declined to comment.