The controversial NSW ethanol mandate costs motorists more than $143 million a year by forcing them to purchase more expensive premium petrol, a new analysis suggests.
It also estimates Australia’s largest producer, Manildra, last year made $4.4 million extra profit thanks to the rules, which state that six per cent of all petrol sold must be ethanol.
The NSW Greens analysis mirrors methodology used by the competition watchdog in a November report that estimated in 2014-15 Sydney motorists may have spent up to $85 million more on petroldue to the mandate.
This was because some motorists who cannot or choose not to use ethanol in their vehicles are using premium unleaded due to the reduced availability of regular unleaded, the Australian Consumer and Competition Commission said.
The ACCC noted its estimate does not take account of factors such as differences in the types of vehicles owned in Sydney, motorists’ preferences or the costs or benefits of using one petrol over another.
The ethanol mandate has been in place since 2007 but the six per cent target is not being met.
Last year the NSW government passed legislation that expands the types of retailers who must abide by it and introduces penalties for failing to do so.
It followed intensive lobbying by Manildra, which donated more than $160,000 to the Coalition before the new laws.
Federal department of environment and energy figures show NSW motorists bought 44 per cent premium unleaded petrol compared to 25 per cent in other states last financial year.
This works out as NSW motorists spending an additional $143,216,592 last year due to the mandate, the Greens analysis estimates.
Industry sources estimate Manildra, which supplies approximately 96 per cent of the ethanol in NSW, makes an average 4.5c profit per litre.
The Greens say this means the company earned an additional $4.4 million profit based on the 1,040,332,000 more litres of the biofuel sold last year in NSW compared with other states.
Greens MP and energy spokesman Jeremy Buckingham said: “While motorists suffer, Manildra will be very happy with the influence their donations have bought as the mandate has gifted over $4.4 million in profits to them in the past year alone”.
“The Greens will be introducing a bill to repeal the ethanol mandate as soon as parliament resumes to test whether the old parties are prepared to finally put the interests of motorists ahead of a major political donor,” he said.
A spokeswoman for NSW Fair Trading argued that the ethanol mandate increases consumer choice “by making E10 more readily available at the bowser”.
She said an increase in premium sales was not due to a reduction in the availability of regular petrol, which was available at 82.5 per cent of stations in NSW.
“The ACCC report itself notes that the rise in premium fuel sales cannot be solely attributed to the biofuel mandate,” she said. Manildra declined to comment.
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