Businesses offered government-backed loans to cut gas use amid supply crunch

Monday, 25 May 2026

Businesses will be able to borrow up to $1.2 billion of government-subsidised loans to help them switch away from gas, ministers have announced.

Finance Minister Nicola Willis said the loans would be made by banks, but the Government would guarantee up to 80% of their value in return for the banks offering a lower interest rate to businesses that took them out.

The Government has budgeted $48 million to pay for the scheme, to recognise the possibility that some of the loans might not be repaid.

The loan scheme comes in the wake of a major write-down of the country’s gas reserves, which was largely triggered by the disappointing performance of a well in OMV’s Pohokura gas field offshore from Taranaki, and as the Government continues negotiations over underwriting a facility to import LNG.

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Prime Minister Christopher Luxon said the Government would have more to say about the LNG facility “in the middle of the year”.

Willis noted some gas-dependent manufacturing businesses had closed, 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,” she said.

The Government guarantee could mean the loans — which would probably be available from July or August — had an interest rate that was up to 1½ percentage points lower than businesses could otherwise obtain, she said.

Energy Minister Simeon Brown said the Energy Efficiency and Conservation Authority would also receive $5.9m in the Budget to help businesses explore options to transition away from gas.

Businesses will need to use at least 1000 gigajoules of gas a year to qualify for the gas transition loans themselves and achieve “genuine savings” of at least 15% while maintaining or increasing production, he said.

That was to ensure the loans focused “growing the economy and protecting jobs, not shrinking output”, he said.

For comparison, an average household with gas for cooking and heating uses about 25 GJ a year.

The individual value of each loan will be capped at $50m.

Labour leader Chris Hipkins responded to the loan scheme by criticising the Government for dismantling the Gidi Fund, which was administered by EECA and provided grants to help businesses switch away from fossil fuels, before it was scrapped in 2023.

“It’s good that they finally discovered that some of those businesses need that support. It’s a shame it’s taken thousands of job losses across the country for them to wake up to that,” he said.

Willis said the schemes were very different.

“The Gidi Fund was hundreds of millions of dollars handed out willy nilly at the behest of a minister.”

The Government loan scheme was “not letting businesses off the hook for their own investments, as the Gidi Fund was doing”, she said.

Associate Energy Minister Shane Jones said the Government would introduce legislation that would let it compel gas users and gas producers to provide it with more information about their arrangements.

“It is important that we have high quality information so that Cabinet ministers have a good understanding as to what threats are materialising,” he said.