27 Oct 2011

Pipeline's estimated cost put at $175 million per day

2:03 pm on 27 October 2011

The New Zealand Institute of Economic Research estimates the Maui gas pipieline fault could cost the economy up to $175 million per day.

Principal economist Shamubeel Eaqub told Nine to Noon that there is a big concentration of food manufacturers in the area hit by the closure of the pipeline.

He said it's very hard to come up with an accurate estimate as the cost may be spread over a large number of people, but it will be quite a lot of pressure on the economy in the upper North Island.

Mr Eaqub said that seeing whether the cost of the disruption has any lasting effect will be crucial.

Owner disclaims liability

The owner of the Maui gas pipeline says it's not liable in the first instance for any compensation for businesses affected by closure of the pipe.

Thousands of business are affected by the closure. Some are demanding compensation.

Maui Development Ltd chairman Rob Jager told Morning Report that in the first instance, the gas supplier, not the pipeline owner, is responsible.

Maui Development Ltd owns the pipeline.

Mr Jager said there may be room for discussion once the cause of the damage is known.

He said that in the first instance gas customers need to discuss possible compensation with their suppliers, not his organisation.

Acting Energy and Resources Minister Hekia Parata says the Government has not even considered compensation for the Maui pipeline failure. She says the focus remains on getting the repairs done.

Vector chief executive Simon McKenzie told the programme that fixing the pipe may take up to three days even if no other problems are identified.

He said further checks could unearth more faults.

Mr McKenzie also says that even after the repairs are complete, customers will have to wait a bit longer before full services can be restored.

Excavation of the pipe was completed overnight. The fault was discovered on Monday.

The damaged area of the pipe needs to be cut out and replaced. The pipeline was laid 30 years ago.