Thousands of Kiwi businesses will be eligible for Government-backed bank loans to help them reduce their reliance on dwindling natural gas supplies, under a new $1.2 billion scheme, the Finance Minister says.
The Gas Transition Loan Guarantee Scheme is one of the first energy initiatives unveiled ahead of Thursday's Budget, with the Crown set to underwrite 80% of each supported loan in return for banks offering lower interest rates to borrowers.
Individual loans will be capped at $50 million, with the scheme running for three years and loans repayable within 10 years, subject to terms agreed to with banks.
Budget 2026 has set aside $48 million to cover potential losses from the scheme.
Finance Minister Nicola Willis said the scheme was a practical response to the closure of gas-dependent businesses 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.
"By assisting others to move to alternative fuel sources, the Government can help preserve jobs, improve New Zealand’s economic outlook, and leave more gas available to firms who have no viable alternative to gas."
The loan scheme forms part of a Budget built around what Prime Minister Christopher Luxon has described as four pillars of national security — international security, energy independence, social cohesion and financial security.
"Energy independence must be treated as an immediate national security interest, instead of a contributing factor to a long-term climate strategy. We will never compete on the global technological frontier without abundant, affordable energy," he said.
Industry groups including BusinessNZ had been urging the Government to act on the issue earlier this year, including calling for below market rate loans.
Businesses must use annually 40x gas of household
Twelve of the 17 gas fields currently operating in New Zealand are expected to stop producing within a decade, according to the Government. Gas prices have been climbing, and many new supply contracts now last only a few months.
To qualify, businesses must use reticulated natural gas and consume at least 1000 gigajoules a year. Eligible businesses could include food processors, brewers, hotels, aged-care facilities and commercial growers using greenhouses.
The scheme will be limited to new loans, not re-financing
Energy Minister Simeon Brown said the Budget also provided $5.9 million for EECA, the energy conservation authority, to work with businesses exploring alternatives.
"These loans will enable businesses to reduce their energy costs and stay competitive by helping them switch some or all of their processes to run on alternative fuel sources, such as electricity or bio energy, and to invest in other energy efficiency measures.
"Businesses meeting the threshold for inclusion in the scheme may be using gas for things like water heating, for example, food processors and brewers, or heating interiors, e.g. hotels and aged care facilities, or commercial growers using greenhouses.
"Thousands of businesses use more than 1000 gigajoules of gas a year which is the threshold for eligibility for the loan scheme," he said.
Declining production and increased demand is pushing costs up by as much as 10%. (Source: 1News)
For comparison, an average gas household uses about 25 gigajoules a year, while the 14 largest gas users use more than 300,000 gigajoules each annually.
Brown said: "To access this finance, businesses must achieve genuine gas savings of at least 15% while maintaining or increasing production, ensuring the focus is on growing the economy and protecting jobs, not shrinking output."
Energy officials have estimated that if the full $1.2 billion of lending proceeds, up to 10 petajoules of gas use could be cut each year, Brown said.
New legislation to require more disclosure
Associate Energy Minister Shane Jones said the Government would also pass legislation requiring gas industry participants to disclose what he described as "critical" supply and demand information to regulators.
"The most recent figures show a 23% decline in New Zealand's gas reserves in the past year and production this year is now expected to be 15% lower than expected at the beginning of the year," he said.
Jones said fragmented and incomplete market information had been weakening confidence and pushing prices up.
"Good information supports good policymaking. Improved transparency will support the Government and market participants to consider their options and make smart investments," he said in a media release.
A change to the Gas Act requiring improved information disclosure will be passed as part of Budget 2026 measures. MBIE will consult on the new information requirements in the Gas Act once the Gas Transparency Bill has been passed.
Regulations may be in place by the end of the year, according to the Government.
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