Min­is­ter and Z En­ergy in war of words

Waikato Times - - BUSINESS - HAMISH RUTHER­FORD

En­ergy Min­is­ter Ju­dith Collins has ques­tioned whether New Zealand’s largest petrol com­pany has made in­ac­cu­rate dis­clo­sures in its mar­ket state­ments and fi­nan­cial re­ports.

The claims were made in a terse ex­change be­tween Collins and Mike Ben­netts, chief ex­ec­u­tive of Z En­ergy, re­leased un­der the Of­fi­cial In­for­ma­tion Act.

Ben­netts ap­par­ently told Collins dur­ing a meet­ing that he took her public state­ments with a ‘‘grain of salt’’. In a let­ter he largely dis­missed a fuel mar­ket study Collins or­dered.

The min­is­ter re­sponded by ac­cus­ing the com­pany of re­leas­ing in­for­ma­tion to the NZX which her of­fice had pointed out was wrong, and of mak­ing ‘‘mis­lead­ing and in­cor­rect’’ state­ments to her.

Within months of tak­ing the en­ergy port­fo­lio, Collins vowed to ‘‘get to the bot­tom’’ of ris­ing fuel mar­gins, or­der­ing of­fi­cials un­der­take an in­quiry, which was re­leased in July.

The study, led by the Min­istry of Busi­ness, In­no­va­tion and Em­ploy­ment (MBIE), found fea­tures which may not be con­sis­tent with a com­pet­i­tive mar­ket, and that higher costs in ar­eas such as Welling­ton were not ex­plained by higher costs in the ar­eas.

Since then, Collins has ac­cused the fuel in­dus­try of ‘‘cyn­i­cal’’ price moves. Of­fi­cial data sug­gests mar­gins col­lapsed in the weeks be­fore the study was re­leased, but re­cov­ered strongly since.

Z En­ergy has be­come in­creas­ingly vo­cal in its dis­pute of of­fi­cial data on mar­gins, which is re­leased weekly by MBIE.

On Au­gust 8, Ben­netts wrote to Collins dis­parag­ing the fuel mar­ket study on the grounds that it did not come close to ful­fill­ing its terms of ref­er­ence.

‘‘The re­port was in­com­plete in terms of both con­tent and par­tic­i­pa­tion; qual­ity was com­pro­mised by im­mov­able dead­lines; it was based on a very poor level of un­der­stand­ing of this in­dus­try and al­most ex­clu­sively failed to ad­dress the study’s own terms of ref­er­ence,’’ Ben­netts wrote.

Collins replied that she was ‘‘sur­prised’’ that dur­ing a meet­ing he had men­tioned tak­ing her com­ments with a ‘‘grain of salt’’.

‘‘I can as­sure you that any com­ments I make to the public or me­dia are, with­out ex­cep­tion, my gen­uinely held views and po­si­tion.’’

She said that al­though in­for­ma­tion re­leased by Z En­ergy was ex­ten­sive, it had cre­ated con­fu­sion. Ben­netts’ let­ter com­pared the study’s find­ings on re­tail mar­gins to Z mar­gins on all the prod­ucts it sells.

This meant Z was com­par­ing the mar­gin on petrol to the mar­gin on ev­ery­thing from bi­tu­men and jet­fuel to choco­late, but pre­sent­ing the com­par­i­son as if it were like for like.

‘‘This state­ment is mis­lead­ing and in­cor­rect on a num­ber of lev­els and bor­ders on the disin­gen­u­ous,’’ Collins said.

Z En­ergy’s var­i­ous claims about its mar­gins on fuel seemed in­con­sis­tent across its dis­clo­sures.

‘‘Nei­ther the net mar­gin in­crease ... stated in your let­ter nor the ... net mar­gin in­crease stated in your sub­mis­sion cor­re­spond to your pub­licly re­ported fi­nan­cial state­ments.’’

Collins ex­pressed ‘‘con­cern’’ about Z’s me­dia state­ment on the study. De­spite her of­fice point­ing to ‘‘a num­ber of fac­tual in­ac­cu­ra­cies’’ in the draft, th­ese were not in­cor­po­rated in a state­ment to the NZX.

‘‘Given the im­por­tance of ac­cu­rate dis­clo­sure to the mar­ket – as raised by Z En­ergy with my of­fice on sev­eral oc­ca­sions – I was con­cerned that you took this stance.’’

Collins said on Fri­day that once she was aware a com­pany was mak­ing in­cor­rect claims she felt obliged to ad­dress the is­sue.

The state­ments she al­leges are wrong were re­leased by Z on July 4 in a state­ment to the NZX and me­dia, af­ter be­ing shared with her of­fice. How­ever Collins did not point out the er­rors to the com­pany un­til Au­gust 9, in a lengthy de­tailed let­ter sent the day af­ter Ben­netts’ terse let­ter to her.

Ben­netts said Z would re­spond in de­tail to Collins’ con­cerns when it makes an of­fi­cial re­sponse to the fuel mar­ket study on Septem­ber 30, but he re­jected claims of in­ac­cu­racy in its dis­clo­sures.

‘‘We are 100 per cent con­fi­dent that the num­bers that we have given to MBIE add up to the num­bers that we’ve dis­closed to the mar­ket be­cause it all comes from the same data source,’’ he said.

Ben­netts’ let­ter raised the prospect of call­ing for the Com­merce Com­mis­sion to un­der­take mar­ket study un­der pend­ing leg­isla­tive changes, some­thing Collins has warned the in­dus­try could face.

But Ben­netts said on Fri­day that al­though the board had dis­cussed mak­ing the public call, it had de­cided to make no com­ment on the is­sue at this stage.

Mike Ben­netts

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