20 Mar 2014

Solid Energy 'failed to plan' for slump

3:10 pm on 20 March 2014

The Auditor-General has told a parliamentary committee Solid Energy failed to plan for the worst-case scenario in terms of the price of coal.

Lyn Provost appeared before the Commerce Select Committee on Thursday to brief MPs on a review of how the state-owned coal company ended up in such trouble.

Last year, the Government had to put in place a bailout package designed to keep Solid Energy afloat for three years.

The Government also removed it from the list of state-owned enterprises up for partial sale because of its financial position.

Andrea Neame, from the Office of the Auditor-General, told MPs the company believed it had a better idea of the future price of coal than analysts.

She said it failed to prepare for the worst case scenario, when the price plummeted in July 2012.

Ms Neame said when that happened, the company was carrying too much debt to be able to adequately respond to the drop in price.

Solid Energy's Stockton coal mine.

Solid Energy's Stockton coal mine. Photo: PHOTO NZ