Angry fuel retailers are accusing the NSW government of doing the bidding of a political donor and putting motorists at risk of higher fuel prices over plans to boost the sale of E10 petrol.

Better Regulation Minister Victor Dominello has outlined the rules to determine which retailers will have to sell the E10 blend of ethanol and regular unleaded for the first time and an exemption regime to shield small businesses who cannot afford to comply.

In a regulation to be published on Friday, Mr Dominello states that only retailers who sell at least 900,000 litres of petrol each quarter – 3.6 million litres a year – will need to start selling E10 for the first time.

This is significantly higher than the 250,000 litres each quarter – 1 million litres a year – proposed by Australia’s largest ethanol producer, Manildra, and means small retailers will not be caught in the net.

Retailers who currently sell more than 3.6 million litres of fuel a year will need to comply from January 1, but newly captured retailers will have until April.

Small Business Commissioner Robyn Hobbs will be a guest of an expert panel deciding exemptions for at least the first year of the new regime.

Mr Dominello said the regime “will boost competition in the marketplace by making E10 more readily available for motorists”.

“In most cases the cost of compliance will be minimal and will unlikely impact prices at the bowser,” he said. He said only about 100 new petrol stations will be forced to sell E10 for the first time.

The policy is designed to meet the requirement in the Biofuels Act that says 6 per cent of all petrol sold by major retailers is ethanol. The current level is 2.5 per cent.

It overturns the previous law, which said retailers with fewer than 20 sites were exempt from selling E10.

Mark McKenzie, the chief executive of the Australasian Convenience and Petroleum Marketers Association (ACAPMA), welcomed the higher fuel sales threshold and the exemptions regime.

But he slammed the government for proceeding with the policy, which he said would “leave the independent family-owned retail businesses, those with up to 20 sites, exposed to higher compliance costs”.

“We’ve consistently advised the government that compliance costs are between $35,000 and $900,000 per site,” Mr McKenzie said.

“These prices will have to be recovered through increased fuel prices. This is a poor policy being pushed by the government for the sole benefit of a major political donor.”

Fairfax Media has revealed Manildra secured 20 meetings with ministers and donated more than $160,000 to the Coalition in a ferocious lobbying effort before the new laws were announced.

Manildra has previously said it has “never sought or had any expectations on returns to our contributions to public or charitable organisations”. The company has been approached for further comment.

Mr Dominello said he was “aware that there will be transition costs for these businesses”.

“I’ve asked the NSW Small Business Commissioner and the Biofuel Expert Panel to develop an exemptions framework that gives newly captured businesses adequate time to transition,” he said.

Extracted from Sydney Morning Herald.