State owned enterprises minister Tony Ryall blames the distressed financial state of Solid Energy on a “perfect storm” of events.
Mr Ryall says a wrong choice of investments, along with a worldwide collapse in coal prices, led to the coal mining company’s current state.
Former chairman John Palmer and former ceo Dr Don Elder today spent two hours in front of parliament’s commerce select committee.
They admitted there were errors in decision-making during their time which saw the company invest in new areas of growth, including biofuels and conversion of lignite to fuel and urea.
Mr Ryall says the government cannot be blamed for the company’s alleged mismanagement because it was the board’s decision to make a number of investments which did not generate the expected returns.
“It is the responsibility of the board to manage debts, dividends and investments. It’s the responsibility of ministers to take accountability both publicly and in parliament.”
He admits the government has a certain degree of responsibility, but only under the State Owned Enterprises Act.
That section of the act state shareholding ministers of SOEs “shall be responsible to the House of Representatives for the performance of the functions given to them by this act or the rules of the state enterprise”.
“A wrong choice in investments, together with the most significant collapse in world coal prices in 2012 led to a perfect storm. The perfect storm has created the situation this company is currently in,” Mr Ryall says.
He repeated the same sentiment twice more as he spoke to media immediately after the select committee appearance.
He says the financial stress suffered by Solid Energy is not unique to the state-owned enterprise or to New Zealand.
“All around the world coal companies have had significant collapses in their financial viability. A number have lost two-thirds of their value just in six months last year.”
In July last year, increased hydropower generation and a drop in downstream demand saw coal prices in China fall to a 20-month low.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Nats baulking over Winston Peters' demand for more ministers
- Vodafone IPO pushed back amid election delay, sources say
- As Amazon looms, survey reveals Kiwis online vs offline buying preferences
- NZSA says Fletcher Building is performing worse now than 10 years ago
- Winston says he's inching closer to a decision
Most listened to
- IDC's Chayse Gorton on Kiwis' online vs offline shopping preference - and how it's out of step with the rest of the world
- NZSA chief executive Michael Midgley on how he will vote undirected Fletcher proxies
- Restaurant Brands' Grant Ellis discusses progress at the fast food group
- Rob Hosking says politicians need to understand the effect their promises will have on what the Reserve Bank has to do
- AMP Capital investment manager Jonathan Armstrong discusses why an expansion is right for Tauranga's Bayfair shopping centre
- NBR Radio: The best interviews, with Grant Walker — updated daily