Regular readers of ACAPMA’s E-Newsletter will be familiar with the continuing and largely farcical saga that is the supposed industry consultation on new biofuels laws to be introduced in NSW from 1 January 2017.

For those that haven’t kept up, the NSW Government passed new laws in March 2016 that are designed to make more fuel retailers sell E10. This is despite the fact that eight years of operation of the previous Biofuels Laws has seen the vast majority of NSW motorists shun E10 in the face of no apparent financial benefit to consumers (or environmental benefit to the community).

The new laws were rushed through the NSW Parliament despite two independent reports produced by a NSW Government body (the Independent Pricing and Regulatory Tribunal or IPART) that concluded that the previous NSW mandate comes at a net cost to the fuel industry and NSW motorists.

In fact, the IPART Reports concluded that the only beneficiary was the State’s monopoly biofuels producer – the Manildra Group – who has a long history of making substantial donations to the NSW Coalition government.

And so the Baird Government pushed on and engaged in a shambolic industry consultation process that commenced during the 2015 Christmas/New Year break and resulted in legislation being rushed through the NSW Parliament in the week before Easter. The legislation passed through both houses of the NSW Parliament with the full support of the NSW Labour Opposition – also a major beneficiary of substantial donations from the Manildra Group in recent years.

What has followed is a demonstration of how not to run an industry consultation process, led by the misnamed Minister for Better Regulation (read Minister for More Regulation) and NSW Fair Trading. The process was one of industry consultation meetings being called at very short notice with no agenda being issued, no formal record of proceedings of any meetings and NSW Fair Trading operating with a consultation timetable that was known only to them – and changed at the apparent whim of the Minister.

The latest development in this ongoing debacle was a communique issued by the NSW Office of Fair Trading last week. The communique advised that the Government had decided to terminate the consultation process and would be shortly announcing the detail of the new Biofuels Regulation -despite the Government previously advising that a consultative draft would be provided to industry for comment in mid-August 2016 (only later to be changed to mid-September 2016 and then abandoned altogether).

And so here we are, facing yet another anti-business saga solely that is being apparently pursued solely for political gain – one that is akin the havoc being brought about by the destruction of the NSW Greyhound industry as a result of a seat-of-the pants political decision by the Baird Government.

The good news, however, is that the recent communique has at least clarified which businesses will be required to comply with the new mandate – which requires fuel retailers to make E10 ‘as available’ as other petrol products from 1 January 2017 (It also calls for the sale of Biodiesel but the cessation of biodiesel production from the State’s biodiesel supplier means that there is currently no biodiesel supply for sale in NSW).

Conversely, any service station that sells more than 3.6ML of transport fuels (i.e. petrol and diesel) will be required to comply with the mandate – which requires that the service station to sell 6% ethanol by total petrol volume (or, put another way, ensure that 6 in every 10 petrol customers actually purchase E10).

Failure to achieve this target in any given quarter, which is solely influenced by customer choice on the forecourt, will result in the retailer being forced to provide a ‘please explain’ to the NSW Government.

“Given the absurdity of the target, there are going to be a lot of businesses providing ‘please explain’ notices to the NSW Government”, said ACAPMA CEO Mark McKenzie.

“I sure hope that the Minister for Better Regulation and his team have plenty of time on their hands as they are going to be dealing with bucket-loads of paperwork in administering these new laws”, said Mark.

The bad news, is that the many small NSW businesses that sell more than 3.6ML per year are likely to have to shoulder substantial costs to upgrade their sites to ensure the environmentally sound storage of E10 at their sites.

“Previous estimates have suggested median costs in the vicinity of $290k per site, with some as high as $900k at individual sites”, said Mark.

This cost comes on the back of investment in Vapour Recovery (VR) regulations in the past two years that has seen compliance costs in the order of $25k per site for VR1 laws and between $80k and $140k per site for VR2.

“NSW is fast becoming the most expensive State to retail fuel and there are no prizes for guessing who will ultimately pay these costs”, said Mark.

So, those fuel retailers with sites selling more than 3.6ML of fuel per year must prepare for the new mandate – that is, once the NSW Government actually provides industry with the details of the regulation (and any transitionary arrangements for enforcement of same) that are urgently needed if businesses are to genuinely prepare for the introduction of the new laws on 1 January 2017.

The clock is ticking.

But for whom is it really ticking – our industry or the anti-business coalition that is the Baird/Grant Government in NSW?

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