Scott Morrison will confirm the government is paying $250 million to Australia’s remaining domestic fuel suppliers, enabling them to upgrade the standard of fuel required for higher-efficiency motors.
Ampol’s refinery in Lytton, Brisbane, and the Viva Energy refinery in Geelong will each get $125 million, a figure that will be matched by the companies, taking the total investment to $500 million.
“COVID-19, the Russian war in Ukraine and trade restrictions have disrupted global supply chains and Australia is not immune,” Mr Morrison will say on Wednesday.
“Oil refineries literally fuel a stronger economy and these investments will ensure upgrades are made to improve the quality of our fuel.”
Fuel security concerns and a steady drumbeat of refinery closures forced the government to put as much as $2.3 billion in last year’s budget into propping up the industry. Since then, geopolitical concerns have only added to the government’s worry, even though the public money does little to reduce Australia’s reliance on imported crude.
The government will reiterate that the money will protect 1250 refinery jobs and enable the creation of another 500 during the construction phase through late 2024.
When the government announced the plan in May 2021, it said payments would be at a maximum of 1.8¢ a litre when the margin dropped to $7.30 per barrel of oil, and nothing over $10.20 per barrel.
The cap is designed to ensure refiners will not get government support when they are performing well. The arrangements can be extended through the mid-2030s.
The Department of Industry, Science, Energy and Resources says Ampol and Viva will not need to receive any payment for the second quarter of the scheme because the refineries are doing well. This follows on from the first quarter, where only Viva received a payment, totalling $12.45 million.
Cost-of-living pressures remain front of mind for both sides of politics. After a surge in fuel prices, the government last month halved petrol excise to 22.1¢ per litre of petrol or diesel. The measure will cost the budget $3 billion in lost revenue over its limited six-month period.
The primary purpose of the grants will be to spur the production of low-sulphur fuel required by many auto manufacturers, the government says.
“Bringing forward the rollout of ultra-low sulphur fuel from 2027 to 2024 will deliver significant health benefits for Australians through improved air quality,” says Energy Minister Angus Taylor. “This is estimated to result in $1.02 billion in avoided health costs.
“The grants are the next step in the Morrison government delivering on our commitment to support Australian domestic refiners to keep producing local fuel for Australian motorists.”
Extracted from AFR