Gas tax backdown: Government pushes ahead with LNG facility

Tuesday, 9 June 2026

Energy Minister Simeon Brown announced the LNG import facility was still needed, on 9 June, 2026

The Government has backed down on a levy to pay for its liquefied natural gas import terminal, but has not confirmed exactly how it will be paid for.

Energy Minister Simeon Brown announced on Tuesday morning that the Government was moving forward with negotiations with two providers, and expects to sign a contract with one later this year.

The new LNG import terminal, which will allow New Zealand to import and store LNG (gas that has been cooled to -160C and turned into liquid for transport) for use in dry years, was expected to be operational by 2027, however Brown said today the expected delivery date had been pushed back to 2028.

“An LNG import facility is the fastest and most affordable way to cover the dry-year gap, keep the lights on, and protect thousands of Kiwi jobs. Every other comparable country in the OECD either has access to abundant natural gas or access to gas imports. New Zealand is an outlier, and it is time we caught up,” Brown said.

Key details of how the facility would be paid for have not been ironed out.

The Government initially proposed a “levy on electricity” to pay for the facility, but backlash about cost to households had changed their tune.

Energy Minister Simeon Brown announces the Government is moving forward with plans for a new LNG import terminal facility, in Auckland, on 9 June, 2026.

It now said the Ministry of Business Innovation and Employment (MBIE) and the National Infrastructure Funding and Finance (NIFFCO) were engaging with power companies on a “fair funding model”.

“Kiwis can be certain of one thing – it will not be funded by a levy on power bills,” Brown said.

The Government and the Opposition have been sparring over a new levy - or is that a new tax?

“Responsibility for keeping the lights on sits squarely with the electricity sector, and that is the principle guiding our decisions on funding.'

It’s unclear how the government will ensure any costs to power companies for the facility would not be passed on to consumers.

The LNG announcement on Tuesday was coupled with a proposal to introduce a new “Winter Energy Reliability Obligation”, which would require major power companies and large electricity users to secure enough back-up energy ahead of a dry year.

“Kiwis have been paying the price for an energy system run on the edge through higher bills and greater risk of shortages. This Government is fixing that by making the electricity sector take real, permanent responsibility for keeping the lights on,” Brown said.

Energy Minister Simeon Brown announces the Government is pressing ahead with plans for a LNG import facility, in Auckland, on 9 June, 2026.

The proposal would somewhat mimic the Minimum Stockholding Obligation faced by fuel companies. It would require large electricity users to find back-up supply, while power companies would be expected to find fuel to ensure supply if hydro lakes were running low ahead of winter.

Power companies could face increased penalties for non-compliance - the Government will move the maximum fine from $2 million to up to $10m, or three times the commercial gain, or 10% of a company's turnover – whichever is the greatest.

“Dry-year risk sits with the electricity sector, not with taxpayers, and not with households. It is only fair that the big power companies and large electricity users are the ones responsible for managing it.”

MBIE will launch a consultation with the energy sector about the plan. The sector itself would be charged with deciding how to ensure cover for dry years whether through generation, dampening demand, buying in more fuel, or creating storage.

The Electricity Industry Act would also be amended to give the Electricity Authority power and responsibility to ensure dry-year risk is effectively managed across the system.