Solid Energy welcomes privatisation call

Solid Energy, which, contentiously, is looking at options to utilise vast reserves of lignite in Southland and Otago, has welcomed the Government announcement up to 49% of some state owned enterprises could be sold.

As an SOE, Solid Energy has, in recent years, been looking closely at options for converting the low grade but abundant southern lignite into briquettes, diesel or fertiliser, in plants which would likely cost more than $1 billion each to construct.

The proposals to use lignite have incensed environmentalists and the Green Party.

The first legal challenge to using lignite is likely to unfold with Solid Energy's imminent resource consent applications in Southland.

Solid Energy chairman John Palmer welcomed Prime Minister John Key's announcement, saying the company would "work constructively to identify an optimal equity structure".

"We recognise that the shareholder [Government] wishes to reduce its borrowing while Solid Energy needs to raise significant capital to advance our business plans, including using Southland lignites to address key issues of national energy security and affordability," he said in a statement yesterday.

Earlier this week, Solid Energy announced plans for investment of up to $25 million in a demonstration lignite briquette plant near Mataura in Southland.

It is intended to be the precursor to a larger export plant at a cost of more than $1 billion, if expansion is commercially viable.

Mr Palmer said the Government announcement "recognises the opportunity for New Zealand", including the "mixed ownership model" which is under discussion.


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