The State Government has revealed it gave embattled chemicals manufacturer Penrice Soda royalty relief.
The relief decision – involving an estimated $280,000 – was not disclosed to shareholders or taxpayers and is unlikely to ever be recovered.
Penrice, an outspoken critic of state and federal government taxes, paid $275,000 in royalties to the state in 2012 and $273,000 in 2013, its annual reports show.
In parliament this week Treasurer Tom Koutsantonis was asked about the extent of the taxpayer’s financial exposure should Penrice not survive its current period of court-appointed administration.
“The government did what it could to help Penrice Soda,” Koutsantonis said.
“We gave Penrice Soda royalty relief.
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“Given the long list of people seeking redress through proceedings that are in place now, I am not sure what the total amount of forgone royalties will be, but I will get that amount and get back to the house. The government makes no apology for doing that.
“The government has very few tools at its disposal to help companies like Penrice Soda. The one that we could introduce very, very quickly, which is very effective, was royalty relief. I think that was a very good measure.”
Penrice Soda went into administration on April 10.
The company faces debts of around $200 million and hasn’t made a profit for years.
It owns an ageing processing plant at Osborne, one of the oldest chemicals manufacturing sites in the state, on the edge of the Port River.
Penrice’s only valuable asset is a limestone quarry at Angaston which has attracted some buyer interest.
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Asked if the state had any prospects of recovering its royalties, Koutsantonis offered little hope.
“In terms of our ability to regain those forgone royalties, I have to seek more advice, but it does not look good, given the state of what is being told to creditors now.”
He did not provide an answer to questions on whether the state could be liable for the cost of remediating Penrice’s Osborne site should it vacate.
The State Government made no mention of the royalty relief when InDaily asked about taxpayer’s exposure to Penrice’s troubled outlook last month.
On April 29 a government spokesman said “agencies such as DMITRE and Renewal SA were represented at creditors’ meetings and are working through the voluntary administration process in the hope that the operations can continue”.
“The government will continue to monitor developments in the hope that the business can continue as a going concern as this remains the best way to secure the jobs of the current workforce at Osborne and Angaston.”
InDaily asked the Treasurer’s office for further details regarding the terms and conditions for royalty relief.
His office declined reveal the amount, date or terms of the royalty relief, but added; “The company is obliged to pay its outstanding royalties and the State Government has put in place a royalty repayment plan.”
Shadow Resources Minister Martin Hamilton-Smith, who asked the questions in parliament this week, said he would pursue the royalty relief issue again next week at hearings of the parliament’s Economic and Finance Committee.
“There should be a clear process and set of guidelines for providing financial assistance to companies,” he said.
“Under previous Liberal Governments this was done via the Industry development Committee, but there appears to be no such process under this government.
“It should be open to more scrutiny than it appears to have been.”
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