The country's two largest fuel companies say there needs to be a levelling of the playing field on petrol taxes, and could change operations to earn tax advantages.
Last month it emerged that the Customs Department was pursuing fuel retailer Gull for $23 million in unpaid excise and penalties, after discovering it had been blending butane into its petrol since 2003.
In doing so it exploited a lower excise rate on butane, which Customs is challenging in the Court of Appeal. Gull, which successfully defended its position in the High Court, has refused to comment while the case is before the courts.
BP New Zealand blew the whistle on Gull's blending in 2010, as it sought clarification from Customs as to whether it, too, could use butane to reduce its excise bill.
Customs refused permission. BP managing director Matt Elliott said it was important the issue was clarified to ensure "fair competition".
"BP pays all taxes and excise as required by law. We're looking forward to a resolution so we can have a level playing field,” Elliott said.
Z Energy's Mike Bennetts said the company was also watching the case closely, with the outcome influencing its future model. Z's interpretation of the rules was that petrol excise should be paid on the full volume sold, including on additives designed to make fuel burn cleaner or more efficiently.
Without a lower excise rate the company saw no reason to add butane.
"It simply doesn't provide any value to the customer," Bennetts said. "You would only do it if it were to provide a cost saving, [but] if you fully meet our understanding of the obligations to Customs, there's no incentive for us to do it."
Bennetts said the company also wanted certainty on an excise exemption on ethanol.
Produced from natural products, up to 10 per cent ethanol can be added to petrol, at zero excise. While Gull has taken up blending ethanol into some of its petrol, Bennetts said Z needed certainty from the Government that the exemption would be maintained should it choose to also add ethanol.
"Anything we do, we would want to do it at scale, and provide the choice to all of our customers across the entire country," Bennetts said.
Blending ethanol at 11 terminals would cost Z "millions, but less than $10 million", Bennetts said.
Both ethanol and butane have a lower energy content than 91 octane petrol, meaning consumers may get less mileage from the same volume, which should be reflected in a lower price.
Bennetts said he hoped organisations such as the Automobile Association (AA) and Consumer New Zealand would place greater scrutiny on different products being sold by fuel companies.
AA spokesman Mark Stockdale said consumers should be made aware if they were buying a fuel blended from other fuels, especially if it affected the energy content.
- © Fairfax NZ News