E-Gas appoints liquidators, customer supply safe for now

Tuesday 19th October 2010

Natural gas supplier E-Gas has been placed in voluntary liquidation, following months of difficulties experienced with gas distributor charges, a prolonged inquiry by the industry regulator, and three years into a legal dispute with Todd Energy-owned Nova Gas.

BDO Spicers have been appointed to manage the liquidation for Egas, which has around 9% market share in New Zealand, and almost 7000 customers, mainly in the commercial and light industrial sectors, with a concentration in Auckland.

E-Gas managing director Ron Rosenberg confirmed the voluntary liquidation to BusinessDesk, and a Gas Industry Company website announcement says arrangements are in place to continue supply to existing customers "in the short term".

"In the longer term, it is likely that the liquidator will arrange to have E-Gas customers transferred to another retailer," the GIC notice says.

E-Gas had been warning industry players for months that it was considering an orderly exit from both the retail and wholesale markets, owing to the difficult environment for private companies operating in the gas market.

The company is understood to have been facing a nine-fold increase in up-front security payments required by the Auckland gas network company, Vector, from $300,000 to $2.7 million earlier this year.

The security payments to network operators are a bone of contention among smaller retailers in both the gas and electricity markets, because they require substantial lumps of working capital to remain idle and in the hands of the networks, which insist on the so-called "prudential" payments before they will deliver the retailer's gas to customers.

E-Gas was also facing lengthy litigation with Todd-owned NovaGas, in a legal dispute that is understood already to have been running for about three years.

Gas industry observers were already concerned this morning about who would bear the costs of gas and network costs for supply to E-Gas customers in the short term, while the liquidators get to grip with the company's wind-down.

Rosenberg declined to comment on the company's circumstances, or on the registration with the Companies Office on August 14 of a new company, EGas Energy, by E-Gas general manager Syd Hunt.

Businesswire.co.nz

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