Causmag International,which manufactures a magnesium supplement for agricultural products from Young in NSW,is paying 350 per cent more for gas than it was two months ago after its wholesale gas provider,Weston Energy,collapsed.
“We are making losses to keep bare minimum business from our customers,” said the company’s director,Aditya Jhunjhunwala. “We are very stressed and traumatised by this,and we’re not the only ones.”
The federal government has promised action to ensure reliable and affordable energy supply,but cast doubt on using a mechanism to hold back liquefied natural gas exports for the domestic market because it would not take effect until January 1.
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The response has frustrated manufacturers paying spot prices,who argue the government has the trigger to stop the situation they’re facing.
“The spot price is influenced by the future price,” Jhunjhunwala said. “If the government pulls that lever now and restricts exports of gas from next year onwards,it is bound to cause spot prices to collapse.”
Causmag is among previous Weston Energy customers now paying more than $44 a gigajoule with AGL Energy. Jhunjhunwala said the company had opted to pay spot prices to keep operations competitive when fixed prices escalated in 2016.