Ministers Announce Gas Transition Support Package

The Government has unveiled a $1.2 billion loan scheme to help thousands of New Zealand businesses move away from dwindling natural gas supplies while protecting local jobs.

The Gas Transition Loan Guarantee Scheme will see the Crown guarantee 80% of each supported loan, enabling banks to offer lower interest rates to borrowers looking to switch fuel sources.

Finance Minister Nicola Willis said the scheme was a practical response to gas-dependent businesses closing across New Zealand. "This will make loans more affordable for firms wishing to switch fuel sources," she said. "New Zealand has seen some gas-dependent manufacturing businesses close, citing the cost of energy as a major factor."

Individual loans will be capped at $50 million, with the scheme running for three years and loans repayable within 10 years. Budget 2026 has allocated $48 million to cover potential losses.

To qualify, businesses must use reticulated natural gas and consume at least 1000 gigajoules annually - about 40 times more than an average household. Eligible businesses include food processors, brewers, hotels, aged-care facilities and commercial growers using greenhouses.

Energy Minister Simeon Brown said businesses must achieve genuine gas savings of at least 15% while maintaining or increasing production. "The focus is on growing the economy and protecting jobs, not shrinking output," he said.

The Budget also provides $5.9 million for the Energy Efficiency and Conservation Authority to work with businesses exploring alternatives like electricity or bio energy.

New Zealand faces a critical gas shortage, with 12 of the 17 currently operational gas fields expected to stop producing within a decade. Gas reserves have declined 23% in the past year, while production is expected to be 15% lower than forecast.

Associate Energy Minister Shane Jones said the Government would pass legislation requiring gas industry participants to disclose critical supply and demand information to regulators. "Fragmented and incomplete market information had been weakening confidence and pushing prices up," he said.

Many new gas supply contracts now last only a few months, reflecting the uncertain market conditions.

Energy officials estimate that if the full $1.2 billion of lending proceeds, up to 10 petajoules of gas use could be cut each year - equivalent to 10 million gigajoules.

Prime Minister Christopher Luxon has described energy independence as an immediate national security interest, forming one of four pillars of national security alongside international security, social cohesion and financial security.

The scheme will only cover new loans, not refinancing existing debt. Regulations for the new gas transparency requirements could be in place by the end of the year.