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Pipeline Authority Act - Pipeline Authority - Report - 1994-95


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P ipeline A uthority

ANNUAL REPORT 1994/95

P ipeline A uthority

The Hon David Beddall, MP, M inister for Resources, P arliam ent House, CANBERRA, ACT, 2600.

D ear M inister,

P u rsu a n t to section 45 of th e Pipeline A uthority Act 1973, I subm it for p re se n ta tio n to the P arliam ent, the a n n u a l rep o rt of the A uthority's o p eratio n s for the y ear ended 30 J u n e 1995 together w ith financial

statem en ts in respect of the year.

A copy of th e re p o rt of th e A u d ito r-G en eral on th e fin an c ial

sta te m e n ts is included in th e report.

W hile a m e n d m e n ts la s t y e a r to the Pipeline A uthority Act 1973

significantly reduced th e A u th o rity ’s role an d functions, 1 9 9 4 /9 5 p re s e n te d m an y c h allen g in g an d com plex is s u e s for sta ff an d

D irectors’ consideration p articularly in resp ect of th e ethane pipeline project.

Policy g u id e lin e s w ere p ro v id ed to th e A u th o rity by you in

D eterm ination 1 /1 9 9 5 w hich provided a fram ew ork for D irectors in respect of the m anagem ent of the Authority.

I w ould like to th a n k th e staff of the A uthority an d legal, accounting and tech n ical advisers w ho all provided m axim um assistan ce to the B oard. T h an k s are extended also to m y fellow D irectors for th e ir s u p p o rt a n d assista n c e d u rin g the year. W ith very few reso u rces

available th e active involvem ent of D irectors in the m anagem ent of the A uthority w as appreciated.

D irectors w ould also like to tak e this o p p ortunity to place on record th e co n trib u tio n of A lan S m a rt as C hief E xecutive Officer of th e

A uthority over the la st three years.

Yours sincerely,

J o h n Shaw ley C hairperson

23 O ctober 1995

KPMG House 80 North bourne Avenue Canberra ACT 2601 GPO Box 1950 Canberra ACT 2601

Telephone: (06) 248 1333 Facsimile: (06) 248 1336

C O N T E N T S Page

Objectives and Policies.............................................................................. 3

Historical Context......................................................................................... 4

The Authority............................................................................................... 6

• legislation.................................................................................. 6

• Directors................................................................................. 6

• staff.......................................................................................... 8

Activities 1994-95 .......................................................................................9

• ethane pipeline...................................................................... 9

• other activities...................................................................... 10

Finance ..................................................................................................... 1 1

• amended role of Pipeline Authority.................................. 1 1

• ethane pipeline project ....................................................... 11

• Minister's Determination .................................................... 1 1

• Audit Qualification 1 9 9 3 /9 4 ........................................... 11

• Revenue and Profit............................................................... 12

Subsidiaries.............................................................................................. 1 3

Audit Report and Financial Statements................................................. 14

Attachment: Determination No. 1/1 995

2

O B J E C T I V E S A N D P O L I C I E S

The objectives of the Authority are to

a) meet its contractual obligations in respect of functions in relation to its

involvement with the construction of the ethane pipeline from Moomba to Botany;

b) finalise its business activities in relation to its remaining and former assets;

c) dispose of its subsidiaries; and,

d) wind down its business activities generally to facilitate its abolition.

In pursuing these objectives the Authority is required to conduct its activities

in accordance with sound commercial principles.

It is the Government's policy to effect the abolition of the Authority as soon as

a) the construction of the ethane pipeline has reached the stage of practical

completion or when all permits, licences and exemptions have been

obtained to enable the completion of the ethane pipeline without the Authority's further involvement; and,

b) the proper finalisation of the winding down of the Authority's other

business activities is achieved

and on a date to be notified by the Minister or 31 December 1996,

whichever occurs first.

3

H I S T O R I C A L C O N T E X T

On 10 May 1 973, Hansard recorded the introduction of legislation to

establish the Pipeline Authority. The original concept provided for a

national integrated pipeline system and took account of long term issues

such as defence, decentralisation, population growth, national

development, inter-connected supplies and possible future export of

liquefied natural gas.

The functions, duties and powers of the Authority included the construction

of pipelines for the conveyance of natural gas and other hydrocarbons

to centres of population and points of export and the maintenance and

operation of those pipelines.

When the Pipeline Authority Act 1 973 was proclaimed on 15 June 1973,

the Authority as a first step took over from The Australian Gas Light

Company the design, construction, ownership and operation of the

Moomba-Sydney natural gas pipeline.

Over 21 years the Authority played a major role in the development of

the gas industry in Australia. A world class gas transmission pipeline

system was constructed and operated in accordance with international

engineering best practice.

During those years nearly 1 900 kilometres of high pressure natural gas

pipelines were constructed, operated and maintained by the Authority.

All the Authority's pipeline operations were monitored and controlled by

a computer-based supervisory control and data acquisition system. Two

compressor stations were constructed at Bulla Park and Young and other

facilities on the system included

a) valve sites located approximately every 30 kilometres with automatic

line break systems;

b) scraper stations;

c) meter stations; and

d) packaged off take stations.

4

A control centre was established at Young including a maintenance base

with workshop facilities. Another maintenance base operated at Cobar

with support facilities at Tibooburra and Moomba.

In 1 992, the Act was amended to implement a reform package for the

Authority to enable it to achieve a more commercial approach to its

operations through the establishment of a subsidiary company to

participate and compete in a wider range of activities than previously permitted. This led to the creation of Pacenco Pty Limited, a wholly owned

subsidiary, to take over the commercial activities of the Authority.

In 1 993 the Government reaffirmed its commitment to sell the Moomba-

Sydney Pipeline System in 1993-94 as one of the major sales to be

undertaken by the Commonwealth in its assets sale program.

The Moomba-Sydney Pipeline System Sales Act [Sale Act] was assented

toon 10 June 1994. Under that Act the Commonwealth transferred assets

of the Pipeline Authority and its subsidiary company, Pacenco Pty Limited

to East Australian Pipeline Limited. The Sale Act provided for continuing

employment of those staff who accepted employment offers from the

purchasers and embodied regulatory rules that would apply specifically

to the pipeline under private ownership.

The Sale Act also amended the composition, functions and duties of the

Pipeline Authority and provided for the Authority to be abolished on a

date to be notified by the Minister or 31 December 1996, whichever

occurs first.

The Sale was completed on 30 June 1994.

5

T H E A U T H O R I T Y

Legislation

The Pipeline Authority is constituted pursuant to the Pipeline Authority

Act 1973 and reports through the Primary Industries and Energy portfolio.

The Minister for Resources, the Hon David Beddall MP, is responsible for

the administration of the Act.

The functions, duties and powers of the Authority are set out in Part III of

the Act. Pursuant to section 1 4A of the Act, the Minister may, after

consultation with the Authority, give the Authority a written determination

setting out the policies and objectives that are to be carried out by the

Authority for the purposes of performing its functions and it is the duty of

the Authority to act in accordance with the determination.

On 10 May 1995, the Minister issued Determination No. 1/1995. A copy of the determination is attached. The policies and objectives include

the requirements that the Authority return surplus funds [including surplus

funds arising from the liquidation of Pacenco Pty Limited] to the

Commonwealth and provides the authorisation necessary to make such

payments. The Authority is also required to submit a Financial and Operating Plan to the Minister.

On 16 December 1994 the Pipeline Legislation Amendment Bill 1994

was enacted. This Act amended the Pipeline Authority Act 1973 to

establish a mechanism by which easements being obtained by the

Authority for the ethane pipeline can be transferred to the ICI subsidiary

[Gorodok Pty Ltd] which is funding their acquisition and which will own

the pipeline and also include provisions intended to facilitate, but not guarantee, the registration of Gorodok's ownership of easement by State

Titles Offices.

Directors

The Pipeline Authority Act 1973 provides for the Authority to consist of

the following Directors

a) the Chairperson;

b) the Deputy Chairperson;

6

c) the Chief Executive Officer; and

d) up to four other Directors.

The directors, other than the Chief Executive Officer, are appointed by

the Minister as part time directors for periods not exceeding five years.

The Chief Executive Officer is appointed by the Authority.

Directors as at 30 June 1 995 were:

John Shawley, Chairperson

Mr Shawley was appointed Chairperson on 21 September 1994 having

been a Director of the Authority since 30 June 1993. A former senior

executive of BP Australia, he is currently a consultant to industry and

Government in the international and Australian oil and gas sectors. He is

a director of Alinta Gas, PowerNet Victoria and J Shawley Consultants

Pfy Ltd.

Robert Alderson, Deputy Chairperson

Appointed from 26 May 1 9 9 4 for such period not exceeding two years as the Pipeline Authority continues in existence. Mr Alderson is the First

Assistant Secretary, Petroleum and Energy Policy Division, Department

of Primary Industries and Energy, Canberra.

Ray Comer, Chief Executive Officer factinal

Mr Comer was appointed from 1 November 1994. He was formerly

General Manager Corporate of the Authority and has had extensive experience in the management of Government Business Enterprises.

Sue Richardson

Dr Richardson was first appointed a member of the Authority on 14 July

1985. Her appointment has been extended for such a period not

exceeding two years from 7 June 1994 as the Authority remains in

existence. She is a Reader in Economics and Chair of the Academic

Board at the University of Adelaide, a half-time Associate Commissioner

of the Industry Commission and is a member of the board of Flinders

Technologies Pty Ltd and of the Advisory Committee of the Economic

Planning and Advisory Council.

7

Peter Fitzgerald

Mr Fitzgerald was appointed from 4 February 1993 until 29 February

1996. He is a management consultant with experience in Australian

and international energy markets. Mr Fitzgerald is a lawyer and a former consultant with McKinsey & Co.

Don McDonald

Mr McDonald is the Senior Advisor, Construction Industry, Worksafe

Australia and was appointed from 2 7 April 1993 until 29 February

1996. He is the Deputy Chairperson of the Neuroscience Institute of

Schizophrenia and Allied Disorders. Mr McDonald is a former Vice

President of the Construction, Forestry, Mining and Energy Union.

Pursuant to section 1 1 of the Act, the Minister for Resources has appointed

Mr W.A. Handke of the Department of Primary Industries and Energy as

a standing acting part time Director of the Authority to act on behalf of

the Deputy Chairperson in the case of unavoidable absence.

As reported last year the former Chairperson Ms Elizabeth Proust resigned

her position on 12 September 1 994. Mr Alan Smart took leave from his

position of Chief Executive Officer on 31 October 1994 prior to his

resignation from the Authority on 3 1 December 1 994.

Staff

Following the sale of the Authority's assets to East Australian Pipeline

Limited [EAPL], 106 former staff members of the Authority accepted offers

of employment and transferred to EAPL. During the year twelve staff

terminated their employment through voluntary redundancy and a further two resigned.

Full time employment with the Authority is now two. To enable the Authority

to meet its obligations in respect of the construction of the ethane line

and to assist in matters associated with the wind up of the Authority's

business activities, external legal, accounting and technical expertise is engaged as required on a consulting or contract basis.

8

A C T I V I T I E S 1 9 9 4 - 9 5

Ethane Pipeline

As reported last year, for some years the Authority has been the major

proponent for the construction of an ethane pipeline from Moomba to

the Botany plant of ICI. The Authority considered that the ethane pipeline

would have been an appropriate extension of its core business and

undertook a detailed feasibility study of pipeline engineering and costing

and environmental issues. It proposed that the Authority would own and operate the pipeline and transport the ethane for ICI.

In the process of the sale of the Authority's assets, ICI agreed that it

would assume ownership of the ethane pipeline. The Moomba-Sydney

Pipeline System Sale Act 1 994 amended the Pipeline Authority Act 1973

to enable the Authority to commence construction of the ethane pipeline

on a project management basis until necessary State Government clearances were obtained by ICI.

This has been achieved under a suite of agreements between variously

the Authority, ICI, East Australian Pipeline Limited and Gorodok Pty Ltd to

cover the construction, operation and maintenance of the pipeline and to

ensure the Authority has sufficient resources to meet its commitment as principal contractor for the project.

The project consists of the design, construction, testing and commissioning,

for ICI Australia Limited, of a 1 375 km long, 219mm high pressure

pipeline and associated facilities to convey ethane from Moomba [SA]

to Botany [NSW]. It is to be commissioned no later than 15 September

1996.

On 15 September 1 994 a construction agreement between the Authority,

Gorodok Pty Ltd [ICI] and East Australian Pipeline Limited was executed

to give effect to the ethane pipeline project.

As at 30 June 1995 most major contracts associated with the construction

of the pipeline were let. Acquisition of easements and rights of access for

the pipeline corridor have been largely completed.

9

Pipeline construction commenced on 27 February 1 995 and work is

proceeding on time and within budget. To 30 June 1 995 expenditure on

the project has totalled $57 million. On current progress ethane will be

available at Botany in mid-June 1 996 with final pipeline commissioning

expected by the end of August 1 996.

Application for State pipeline licences are expected to be submitted in

August 1 995. The Authority's objective is to ensure that the granting of

pipeline licences occurs at the earliest practical time.

Other Activities

The Authority continues to wind down its business activities in accordance

with its financial and operating plan in order to facilitate its abolition.

The Authority acknowledges that the Government requires the winding

up of the Authority to be completed as soon as possible. To meet this

objective it is necessary that all activities associated with this exercise

are carried out in accordance with sound commercial and risk

management principles while fulfilling contractual and statutory obligations

and requirements.

During the year transition arrangements for staff, resources and records,

from the Authority to EARL, were completed and funding and staffing for

ongoing Authority requirements secured.

Tasks to be completed on fulfilment of the Authority obligations to the

ethane pipeline project and prior to abolition include the

a) finalisation of accounts;

b) settlement or transfer of any outstanding leases and contracts;

c) transfer of residual assets and liabilities to the Commonwealth; and,

d) retrenchment of remaining staff.

On present planning it is likely that the Authority will complete its

contractual obligations to the ethane pipeline project towards the end of

1995 with final abolition of the Authority expected by end of the calendar year.

10

F I N A N C E

Amended Role of Pipeline Authority

The amendments to the Moomba Sydney Pipeline System Sale Act 1 994

empowered the Authority to carry on business for the purpose of finalising any activities which were identified as

a) the construction of an ethane pipeline from Moomba in South Australia to Botany in New South Wales;

b) finalising its business activities in relation to those assets which were

sold on 30 June 1995; and

c) the winding down of the Authority's business activities to facilitate the abolition of the Authority.

Ethane Pipeline Project

Under the provisions of the Construction Agreement entered into by the

Pipeline Authority, Gorodok Pty Ltd [1CI] and East Australian Pipeline

Limited on 15 September 1994, ICI is required to provide funds in

advance to the Pipeline Authority to meet all costs associated with the ethane pipeline project.

During the financial year 1 9 9 4 /9 5 the Authority received revenue from

ICI amounting to $50.1 million to meet contract expenses incurred of

$50.1 million.

Minister's Determination

Under the provisions of the Pipeline Authority Act 1973 the Minister

issued Determination N o.l of 1995 the Authority must pay to the

Commonwealth any monies that the Authority considers likely to be surplus

to its operational requirements. During June 1995 the Authority made

payments to the Commonwealth totalling $11.8 million.

Audit Qualification 1993/94

The Australian National Audit Office qualified the accounts of the Authority

and Pacenco Pty Limited [wholly owned subsidiary of the Authority] on

the basis that there may be a material misstatement as the Auditor had

been unable to satisfy himself that the market valuations of the lateral

pipelines at 30 June 1994, adopted by the Directors of Pacenco Pty

Limited, to determine the provision for income tax, probably reflected the

market value. Since that time the Australian Taxation Office has accepted

the basis of the calculations and issued a clearance for the Liquidator to

proceed to final liquidation of Pacenco Pty Limited.

Revenue and Profit

During the 1 9 9 4 /9 5 financial year the Authority earned an operating

profit and extraordinary items after income tax amounting to $2.9 million.

This profit was principally derived from contract fees paid to the Authority

in relation to the development and implementation of the ethane pipeline

project.

Pursuant to Section 30[3] of the Pipeline Authority Act, the Authority has

advised the Minister for Resources that the profit of $2.9 million should

be retained by the Authority as Accumulated Funds pending the expected

abolition of the Authority within the 1 9 9 5 /9 6 financial year.

12

S U B S I D I A R I E S

KPMG was appointed as liquidator of Pacenco Pty Limited, the wholly

owned subsidiary of the Authority, following the signing by Directors of

the Declaration of Solvency, lodgement with the Australian Securities

Commission and the passing of the necessary resolutions by the

shareholders of the company on 21 October 1 994.

All processes and clearances have now been completed and it is expected

that the company will be formally wound up in November 1 995.

Adix Pty Ltd, a wholly owned subsidiary of Pacenco was deregistered on 15 May 1 995.

Following the signing of the Construction Agreement for the ethane pipeline

project, Gorodok Pty Ltd, a wholly owned subsidiary of Pacenco, was

sold to ICI Australia Limited as part of the implementation of the project.

13

AUSTRALIAN NATIONAL AUDIT OFFIC

ΔΧ

A d d r e s s all mah

GPO Box 7 CANBERI ACT 26

Ref:

INDEPENDENT AUDIT REPORT

To the Minister for Primary Industries and Energy

Scope

I have audited the financial statements of the Pipeline Authority for the year ended 30 June 1995. The financial statements comprise:

• Balance Sheets

• Profit and Loss Statements

• Statement o f Cash Flows

• Notes to and forming part of the Financial Statements, and

• Certificate by Authority Directors.

The financial statements include the consolidated accounts o f the economic entity comprising the Authority and the entities it controlled at the year’s end or from time to time during the financial year. The Directors o f the Authority are responsible for the preparation and presentation of the financial statements and the information contained therein. I have conducted an independent audit of the financial statements in order to express an opinion on them to the Minister for Primary Industries and Energy.

The audit has been conducted in accordance with Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards, to provide reasonable assurance as to whether the financial statements are free o f material misstatement. Audit procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation o f accounting policies and significant accounting estimates.

These procedures have been undertaken to form an opinion whether, in all material respects, the financial statements are presented fairly in accordance with Australian Accounting Concepts and Standards, other mandatory professional reporting requirements and statutory requirements so as to present a view which is consistent with my understanding o f the Authority's and the economic entity’s financial position, the results o f their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Centenary House, 19 National Circuit, Barton, ACT 2600. Telephone (06) 203 7300 Facsimile (06) 203 7777

14

II Μ Audit Opinion

In accordance with sub-section 45(2) o f the Pipeline Authority Act 1973, I now report that the statements are in agreement with the accounts and records of the Authority, and in my opinion:

i) the statements are based on proper accounts and records

ii) the statements show fairly in accordance with Statements of Accounting Concepts, applicable Accounting Standards and other mandatory professional reporting requirements the financial transactions and results, and cash flows for the year ended 30 June 1995, and the state o f affairs as at that date o f the Authority and the economic entity

iii) the receipt, expenditure and investment of moneys, and the acquisition and disposal of assets, by the Authority during the year have been in accordance with the Pipeline Authority A ct 1973, and

iv) the statements are in accordance with the Guidelines for Financial Statements of Commonwealth Authorities.

Australian National Audit Office

Executive Director

For the Auditor-General

Canberra

4 October 1995

15

PIPELINE AUTHORITY

PROFIT AND LOSS STATEMENTS FOR THE YEAR ENDED 3 0 JUNE 1995

OPERATING REVENUE Haulage revenue Sales revenue C ontract fee and initial costs C ontracts revenues In terest O ther A bnorm al item s

TOTAL OPERATING REVENUE

OPERATING EXPENSE N atural gas Operation and m aintenance expenses - Wages, salaries and employee benefits

Com m unication system s rental M aterials and services Depreciation Other expenses A dm inistrative expenses

Prelim inary planning costs C ontracts expenses Interest and other financing expenses Intercom pany fees

TOTAL OPERATING EXPENSE

OPERATING PROFIT (LOSS) BEFORE INCOME TAX Income tax attributable to operating profit

Operating profit after incom e tax

Profit (loss) on extraordinary items

Income tax attributable to profit (loss) on extraordinary item s

Profit (loss) on extraordinary items after income tax

O perating profit (loss) and extraordinary item s after incom e tax

Chief Entity C onsolidated

Note 1996 1994 1994

$000 $000 $000

2 74 321 76 380

2 - - 15 999

3 3 198 - -

4 50 069 1 644 1 644

568 1 577 1 201

3 65 80

5 - 10 694 -

53 838 88 301 96 304

- - 10 494

6 3 999 4 176

87 1 679 1 697

28 2 865 2 882

- 16 249 17 591

6 - 3 549 3 552

7 969 3 856 4 069

324 - -

4 50 069 1 606 1 606

8 13 23 992 23 992

9 (25) (2 374) -

5 1 4 6 5 55 421 7 0 0 6 9

10

11

2 3 7 3 32 880 25 245

2 3 7 3 32 880 25 245

12 546 (12 070) (4 435)

12

546 (12 070) (4 435)

2 9 1 9 2 0 8 1 0 2 0 8 1 0

16

PIPELINE AUTHORITY

PROFIT AND LOSS STATEMENTS FOR THE YEAR ENDED 3 0 JUNE 1995 [continued]

ACCUMULATED FUNDS (LOSSES) AT BEGINNING OF FINANCIAL YEAR

TOTAL AVAILABLE FOR APPROPRIATION

Allocation of profit to the Commonwealth

Payment of su rp lu s monies to the C om m onw ealth

ACCUMULATED FUNDS (LOSSES) AT END OF FINANCIAL YEAR

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

10963 (5 847) (5 847)

13 882 14 963 14 963

- 40 0 0 4 000

11 844 „

11 844 4 000 4 000

2 0 3 8 10 963 10963

The accom panying notes form an integral part of these financial accounts.

17

PIPELINE AUTHORITY

BALANCE SHEETS AS AT 30 JUNE 1 9 9 5

Chief Ehtity C onsolidated 1995 1994 1994

Note $000 $000 $000

CURRENT ASSETS

Cash 2 425 24 44

Receivables 16 419 8 135 10 734

In v estm ents 17 100 3 978 6 776

O ther 18 1 324 2 276

TOTAL CURRENT ASSETS 2 9 4 5 12 461 19830

NON-CURRENT ASSETS

In v estm ents 17 - 5 928 -

Property, plant and equipm ent 19 5 - -

TOTAL NON-CURRENT ASSETS 5 5 9 2 8 -

TOTAL ASSETS 2 9 5 0 18 389 19 8 3 0

CURRENT LIABILITIES

C reditors 20 729 1 646 3 087

P ro v isio n s 22 183 5 780 5 780

TOTAL CURRENT LIABILITIES 912 7 4 2 6 8 8 6 7

TOTAL NON-CURRENT LIABILITIES - - -

TOTAL LIABILITIES 912 7 4 2 6 8 8 6 7

NET ASSETS (LIABILITIES) 2 0 3 8 1 0 9 6 3 10963

EQUITY

Accumulated funds (losses) 2038 10 963 10 963

TOTAL EQUITY 2 0 3 8 10 963 10963

The accompanying notes form an integral part of these financial accounts.

18

PIPELINE AUTHORITY

STATEMENT OF CASH FLOWS FOR YEAR ENDED 3 0 JUNE 1995

Chief Entity C onsolidated

Note 1995 1994 1994

$000 $000 $000

In flow s Inflow s In flow s

(Out- (Out- (Out-

flow s) flows) flow s)

CASH FLOWS FROM OPERATING ACTIVITIES Haulage revenue 6 192 76 030 77 778

Sales revenue - 2564 16 064

C ontracts revenues 51 058 - -

C ontracts fee 3 198 - -

Interest on Investm ents 586 1 039 1 188

Interest from controlled entity - 518 -

M iscellaneous income - 88 88

O ther income 49 449 464

61 083 80 688 95 582

Natural gas purchased - (1 662) (10 526)

O peration, m aintenance and adm inistrative expenses (2 781) (16 275) (16 742)

Interest and other financing expenses (13) (23 533) (23 533)

C ontracts expenses (49 522) -

Intercom pany fees 25 1 824 -

(52 291) (39 646) (50 801)

Net cash flows provided by operating a ctiv ities (a) 8 7 9 2 4 1 0 4 2 44 781

CASH FLOWS FROM INVESTING ACTIVITIES Repayment of loans to employees - 9 9

Repayment of loans to controlled entities - 917 -

Liquidation of controlled entity id) 6 144 - -

Proceeds from sale of non-current assets - 430 430

6 144 1356 439

Purchase of sh ares in controlled entities (c) - (2 000) -

Purchase of non-current assets (37) (966) (2 970)

C onstruction of Junee-G riffith pipeline - (8 148) (8 148)

(37) (11 114) (11 118)

Net cash flows u sed and provided by in vestin g a ctiv itie s 6 1 0 7 (9 758) (10 679)

19

PIPELINE AUTHORITY

STATEMENT OF CASH FLOWS FOR YEAR ENDED 3 0 JUNE 1995 [continued]

Chief Entity C onsolidated

N ote 1995 1994 1994

CASH FLOWS FROM FINANCING ACTIVITIES P urchase of Inscribed stock by the Commonwealth

Repaym ent of Commonwealth loans Repaym ent of Inscribed stock Repaym ent of ban k loans Paym ent of su rp lu s m onies to

the Commonwealth Paym ent of allocation of profit to the Commonwealth

N et cash flows used in financing activities

N et increase (decrease) in cash held C ash at beginning of reporting period

Cash at end o f reporting period

$000 $000 $000

In flow s In flow s Inflow s

(Out- (Out- (Out-

flow s) flow s) flow s)

3 - -

3 - -

-

(16 586) (16 586)

- (16 000) (16 000)

- (27) (27)

(11 844) - -

(4 000) (7 087) (7 087)

(15 844) (39 700) (39 700)

(15 841) (39 700) (39 700)

(942) (8 416) (5 598)

3 467 11 883 11 883

2 5 2 5 3 4 6 7 6 2 8 5

The accompanying notes form an integral part of these financial accounts.

20

PIPELINE AUTHORITY

Notes to and forming part of th e statem en t o f cash flows

(a) RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO OPERATING PROFIT

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Operating result Add/(Less)

2 919 32 880 25 245

D epreciation - 16 420 17 763

A m ortisation of stock - 827 827

Net Loss/(Profit) on disposal of assets 32 (151) (151)

Decrease/(increase) in prepaym ents (1) 19 19

D ecrease/(Increase) in debtors 7 747 2 410 (430)

(Decrease) /In crease in creditors (417) (1 181) 475

Decrease (Increase) in other current assets 324 99 99

Non cash flows in operating profit A m ounts set aside to Provision

(215) (567) (46)

- employee entitlem ents (1 597) 980 980

A bnorm al Item s Net cash flows provided by

(10 694)

operating activities 8 7 9 2 4 1 0 4 2 44 781

(b) RECONCILIATION OF CASH

C ash a t th e end of th e reporting period a s show n in th e sta te m e n t of

c a sh flows is reconciled to th e related item s in the b a la n c e sh e e ts as

follows:

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Overdraft - (532) (532)

Cash 2 425 24 44

Short term m oney m arket 100 975 1073

B ank bills - 3 0 0 0 5 700

Cash at end o f reporting period 2 525 3 4 6 7 6 285

(c) NON CASH TRANSACTIONS FROM INVESTING AND FINANCING ACTIVITIES.

The A uthority acquired s h a re s in Pacenco Pty Limited totalling $32,452 m illion in exchange for incom e p roducing a s s e ts during the year ended 30 J u n e 1994.

21

PIPELINE AUTHORITY

N otes to and form ing part of th e statem en t of cash flows

(d) DISPOSAL LIQUIDATION OF CONTROLLED ENTITIES.

On 15 S eptem ber 1994 all of th e o rdinary s h a re s of Gorodok Pty Ltd (a controlled en tity of Pacenco Pty Limited) w ere sold a t p a r value for $2.

On 27 O ctober 1994 th e co n tro lled e n tity P acenco Pty Lim ited w as

placed into voluntary liquidation. O n 20 J u n e 1995 th e Liquidator m ade a first an d final cash d istrib u tio n of th e n e t a s s e ts of th e com pany

am ounting to $6,144 million.

On 15 M ay 1995 Adix Pty Ltd (a co n tro lled e n tity of P acenco Pty

Limited) w as deregistered.

(e) FINANCING FACILITIES

See Note 21.

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PIPELINE AUTHORITY

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

T he following p rin cip al acc o u n tin g policies h av e b e e n ad o p ted in th e

p rep aratio n of the accom panying accounts:

1.1 Basis and Presentation of Accounts

T he a c c o m p an y in g a c c o u n ts are p re p a re d in a c c o rd a n c e w ith th e

h isto ric a l co st convention, en co m p ass th e a c c ru a l a n d going concern b asis an d do not reflect c u rre n t valuation of n on-m onetary assets.

The P ipeline A uthority ["the A uthority"] is a body co rp o rate u n d e r th e P ipeline A u th o rity A ct 1973. The a c c o u n ts have b e e n p re p a re d in

acco rd an ce w ith th e Act, th e A u stralian A ccounting S ta n d a rd s an d the G uidelines for F inancial S tatem en ts of Com m onw ealth A uthorities.

T he c a rry in g a m o u n ts of all n o n - c u r r e n t a s s e ts a re review ed to

d eterm in e w h e th e r th e y are in excess of th e ir recoverable a m o u n t a t

b alan ce date. If th e carrying am o u n t of a n o n -c u rre n t a sse t exceeds the recoverable am ount, th e a s s e t is w ritten down to the lower am o u n t.

The a c c o u n ts and consolidated a cc o u n ts have been p rep ared on a going c o n c e rn b a s is even th o u g h th e A u th o rity is to be a b o lish ed by 31

D ecem ber 1996 or a d ate notified by th e M inister w hichever o ccu rs first. No a d ju stm e n ts are req u ire d to th e carrying a m o u n ts of th e a s s e ts or

liabilities, an d d irecto rs are satisfied th a t all a s s e ts will be realised a t

th eir carrying am ount.

F ig u res in th e acc o m p an y in g a c c o u n ts a n d n o te s a re e x p ressed in

A ustralian currency.

1.2 Principles o f Consolidation

The co n so lid ated a c c o u n ts a s a t 30 J u n e 1994 of th e econom ic entity

com prise th e a cc o u n ts of th e chief en tity th e Pipeline A uthority, and its controlled en tity P acenco Pty Limited an d its controlled en tities. The

effects of all tra n s a c tio n s betw een en titie s in th e econom ic en tity are

elim inated in full. The a c c o u n ts as a t 30 J u n e 1995 re p re se n t only the

chief en tity the Pipeline A uthority. T here are no other in te re sts in other en tities.

On 15 S eptem ber 1994 G orodok Pty Ltd (a controlled en tity of Pacenco Pty Limited) w as sold to ICI A u stralia In v estm en ts Pty Limited a s p a rt of th e c o n tra c tu a l a rra n g e m e n ts for th e co m m en ce m en t of th e eth an e

pipeline project. O n 27 O ctober 1994, th e controlled entity Pacenco Pty Limited w as placed into v o lu n tary liq u id atio n by the Pipeline A uthority and a s a consequence Adix Pty Ltd w as deregistered on 15 May 1995 -

see Note 26.

N otes to and forming part of th e financial accou n ts for the year ended 3 0 Ju n e 1995.

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PIPELINE AUTHORITY

1.3 Cash Flows

For the p u rp o se of the s ta te m e n t of cash flows, c a sh includes cash on

h a n d , c a s h h eld a t call w ith b a n k s a n d fin a n c ia l in s titu tio n s an d

investm ents in m oney m arket in stru m e n ts, n e t of b a n k overdrafts.

1.4 Preliminary Planning Costs

E x p en d itu re re la te d to p re lim in a ry p la n n in g c o sts is a cc o u n ted a s a

c u rre n t a s s e t to th e ex te n t th a t s u c h c o s ts are recoverable beyond

reaso n ab le d o u b t. If a project proceeds the co sts are capitalised. If the

project does n o t proceed or th e in te re s t th e re in is sold the co sts are

w ritten off to profit and loss in th e year the decision is m ade.

1.5 Depreciation

No depreciation is charged in resp ect of the capital co st of a facility until it is in reg u la r com m ercial operation an d revenue producing.

Item s of p ro p e rty , p la n t a n d e q u ip m e n t, in c lu d in g b u ild in g s an d

leaseh o ld p ro p e rty b u t ex clu d in g freehold lan d , a re d ep reciated over

th e ir estim ated u sefu l lives or over th e life of th e respective co n tracts.

The straight-line m ethod is u sed in all calculations from 1 Ju ly 1987.

1.6 Investm ent

All investm ents o th er th a n controlled entities have b een valued a t cost.

1.7 Taxation

T he A uthority is n o t su b ject to incom e tax, how ever it is liable to pay

cu sto m s and excise duty. The A uthority's controlled en tities are su b ject to taxation u n d e r th e laws of the C om m onw ealth an d a S tate or Territory.

The A uthority is su b ject to charges an d tax es s u c h a s B ank A ccounts

D ebits, Fringe B enefits Tax, F inancial In stitu tio n s D u ty an d Payroll Tax u n d e r legislation of New S outh W ales and the A u stralian C apital Territory, except for Payroll Tax w hich is a n ex g ratia p ay m en t in th e A u stralian

C apital Territory.

T he controlled en tities adopt th e liability m ethod of tax-effect accounting w hereby th e incom e tax expense show n in th e profit a n d loss is based on th e o p e ra tin g p ro fit before incom e ta x a d ju s te d for a n y p e rm a n e n t

differences.

N otes to and forming part of th e financial accounts for th e year ended 30 Ju n e 1995.

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PIPELINE AUTHORITY

1.7 Taxation [continued]

Tim ing differences w hich arise due to the different accounting periods in w hich item s of revenue an d expense are included in th e determ ination of o p eratin g profit before incom e tax an d ta x ab le incom e are b ro u g h t to

a c c o u n t e ith e r a s a p rovision for d eferred incom e ta x o r a n a s s e t

d e sc rib e d a s fu tu re incom e ta x b e n e fit a t th e ra te of incom e ta x

ap p licab le to the period in w hich th e b en efit will be received or th e

liability will become payable.

F u tu re incom e tax benefits are not b ro u g h t to acco u n t u n le ss realisation of the a s s e t is a ssu re d beyond any reaso n ab le doubt. F u tu re incom e tax benefits in relation to ta x losses are n o t b ro u g h t to acco u n t u n le ss there is v irtu al certain ty of realisatio n of th e benefit. The a m o u n t of benefits b ro u g h t to account or w hich m ay be realised in th e fu tu re is b ased on the

a s s u m p tio n th a t no a d v e rse ch an g e will o c c u r in incom e ta x a tio n

legislation, and th e a n ticip a tio n th a t th e controlled en titie s will derive sufficient fu tu re a s s e s sa b le incom e an d com ply w ith th e conditions of deductibility im posed by th e law to perm it a fu tu re incom e ta x benefit to be obtained.

1.8 Employee E n titlem en ts

P rovision is m ade in th e a c c o u n ts for all e n title m e n ts a c c ru in g to

em ployees, in clu d in g obligations in re s p e c t of a n n u a l leave a n d Tong service leave - see Note 22.

The M oom ba-Sydney Pipeline System Sale Act 1994 provided for staff to be offered em ploym ent by th e p u rc h a s e r of th e pipeline system w hereby there w ould be co n tin u ity of service an d tra n s fe r of accru ed entitlem ents for a n n u a l leave an d long service leave. As a re su lt of staff transferring to

th e p u rc h a s e r red u ctio n s have been m ade to th e Provisions - see Note

12. Provisions exist in in d u stria l aw ards for staff to be declared su rp lu s and m ade re d u n d a n t by th e A uthority. Provision h a s been included in the acc o u n ts for the estim ated liability for red u n d a n c y p ay m en ts - see Note 2 2 .

C ontributions payable to th e Com m onw ealth su p e ra n n u a tio n schem es are charged against th e profit a n d loss - see Note 24.

1.9 Rounding

All a m o u n ts in th e ac c o u n ts have b een rounded to the n e a re st th o u san d dollars as indicated, u n le ss show n otherw ise.

Notes to and forming part of th e financial accounts for the year ended 3 0 June 1995.

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PIPELINE AUTHORITY

2. HAULAGE AND SALES REVENUE

N otes to and forming part of th e financial accounts for th e year ended 3 0 Ju n e 1995.

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Haulage Revenue - Pipeline System - 74 321 74 321

- Brewongle-Oberon - - 820

- Junee-Griffith - 1 239

- 74 321 76 380

Sales Revenue - Dalton-Canberra - - 15 999

O n 30 J u n e 1994 u n d er th e M oom ba-Sydney Pipeline System Sale Act 1994 th e p ip e lin e sy stem in c lu d in g th e B rew ongle-O beron, J u n e e - G riffith an d D a lto n -C a n b e rra p ip elin es cea se d to b e a s s e ts of th e

Pipeline A u th o rity and P acenco Pty Limited an d b ecam e a s s e ts of a n u n related entity.

3. CONTRACT FEE AND INITIAL COSTS

The A uthority entered into a C onstruction A greem ent w ith Gorodok Pty Ltd an d o th e r p arties on 15 S eptem ber 1994. The A uthority is entitled to receive fees of $3.6 m illion a n d recovery of in itia l costs in c u rre d

su b je c t to th e te rm s of th e C o n stru ctio n A greem ent, a n d h a s received $3,198 million of these am o u n ts d u rin g the y e a r ended 30 J u n e 1995.

4. CONTRACTS REVENUES AND EXPENSES

U nder th e C o n stru ctio n A greem ent th e A u thority will design co n stru c t an d com m ission th e eth an e pipeline and sh all v est in Gorodok Pty Ltd all rights, title a n d in te re st in th e pipeline a s it acq u ires su c h rights.

The A u th o rity h a s received c o n tra c ts rev en u e from G orodok Pty Ltd d u rin g th e year of $50,069 million to m eet co n tra c ts expenses incurred of $ 5 0 ,0 6 9 million.

5. ABNORMAL ITEMS

The b u s in e s s of th e A uthority w as reorganised p u r s u a n t to P a rt VA of th e Pipeline A u th o rity Act 1973 from 1 J u ly 1993 w herein c ertain

b u s in e s s of th e A uthority w as tra n sfe rre d to P acenco Pty Limited, a

c o n tro lle d e n tity of th e A u th o rity . T he M in iste r for R e so u rc e s

d eterm in ed a n e t m ark et value of th e tra n sfe rrin g b u s in e s s of $24.05 m illion w hich com prised th e C anberra, O beron an d partially com pleted G riffith pipelines less a loan liability to Pacenco P ty Limited of $5.5

million. H ie A uthority realised a profit of $ 1 0 ,6 9 4 m illion from th e sale of the C an b erra an d O beron pipelines, and tra n sfe rre d capital w ork in p ro g ress on th e Griffith pipeline. Pacenco Pty Limited issued sh a re s to th e value of $24.05 million in exchange for th e tran sferred busin ess.

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PIPELINE AUTHORITY

6. OPERATION AND MAINTENANCE EXPENSES

W ages, salaries a n d em ployee b enefits in c lu d e s ch arg es for em ployee provisions w hich are disclosed in Note 22.

O th er expenses in c lu d e profit on d isp o sal of fixed a s s e ts $Nil (1994

profit of $140,000).

7. ADMINISTRATIVE EXPENSES

Notes to and forming part o f th e financial accounts for the year ended 3 0 June 1995.

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Wages, salaries and employee benefits * 187 2 190 2 243

External Audit fees ** 17 103 117

D epreciation Loss (profit) on disposal of fixed

171 171

assets - (11) (11)

Other expenses 828 1 535 1681

M iscellaneous income (63) (14) (14)

969 3 974 4 187

Charged against operating expenses 969 3 856 4 069

Charged against capital projects - 118 118

Employee provisions charged to profit and loss are disclosed in Note 22.

The Auditor provided no other services and received no other benefits.

8. INTEREST AND OTHER FINANCING EXPENSES

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Interest on loans from Commonwealth - 7463 7463

Interest on inscribed stock - 15 666 15 666

Interest on b an k loans - 41 41

O ther financing expenses 13 1 020 1020

13 24 190 24 190

Charged against operating expenses 13 23 992 23 992

Charged against capital projects - 198 198

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PIPELINE AUTHORITY

9. INTERCOMPANY FEES

A Services A greem ent w as executed betw een th e A u th o rity an d Pacenco Pty Limited com m encing on 1 J u ly 1993 w h ereb y a range of services

w ere provided to P acenco Pty Lim ited in re la tio n to o p eratio n an d

m a in te n a n c e of its pipelines, p ro v isio n of c o n s u lta n c y services an d

ad m in istrativ e services for m a n a g e m e n t of th e co m p an y 's b u sin e ss. In addition, th e A uthority charged Pacenco Pty Lim ited for the carriage of its gas in th e A uthority's pipeline from M oomba to D alton for th e D alton- C an b erra pipeline during th e y e a r ended 3 0 J u n e 1994 - see also Note

29.

10. OPERATING PROFIT (LOSS)

The cost recovery co n tract for th e carriage of gas in th e A uthority's m ain pipeline system u n d e r th e provisions of th e u n e x e c u te d Pipeline System Deed co n tin u ed in operation u n til 31 D ecem ber 1993. On 10 D ecem ber 1993, th e A uthority and AGL executed a Second Deed of V ariation to the m a in c o n tra c t w hich set a com m ercial ta riff to ap p ly from 1 J a n u a r y

1994 to 3 0 J u n e 1994, s u b je c t to th e sale of th e M oom ba-S ydney

pipeline proceeding.

A C o m p e n sa tio n D eed w as e x ec u ted betw een th e C om m onw ealth of

A ustralia, th e Pipeline A uthority, Pacenco Pty Limited an d AGL a s p a rt of th e sale of th e pipeline system on 30 J u n e 1994. T his Deed term in ated

or novated all h au lag e agreem ents an d the b u s in e s s a rran g em en ts a s a t 30 J u n e 1994 betw een the A uthority, Pacenco Pty Limited and AGL.

T he D a lto n -C a n b e rra and B rew ongle-O beron an d p a rtia lly com pleted Ju n ee-G riffith pipelines tra n s fe rre d to a controlled e n tity Pacenco Pty Limited on 1 J u ly 1993 as p a rt of th e reo rg an isatio n of th e b u sin e ss of

th e A uthority.

W ith the sale of th e pipeline system a ss e ts of th e A uthority as a t 30 J u n e 1994, profits derived during th e y e a r ended 3 0 J u n e 1995 relate to the

co n tra c t fee (see Note 3) an d in te re s t received on fu n d s invested d u rin g th e financial year.

T here w ere no b a d debts w ritten off in the profit a n d lo ss a c c o u n t or

ag ain st any provision, reserve or o th e r account.

N otes to and forming part of the financial accounts for th e year ended 3 0 Ju n e 1995.

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PIPELINE AUTHORITY

11. INCOME TAX EXPENSE

Notes to and forming part of th e financial accounts for the year ended 3 0 June 1995.

The p rim a facie ta x on o p eratin g profit is reconciled to th e

provided in the acco u n ts as follows:

incom e ta x

Chief Entity C onsolidated 1995 1994 1994

Prima facie tax payable on operating profit and extraordinary items before income tax

$000 $000 $000

at 33%

Add: Tax effect of perm anent differences:

6 867

- non taxable chief entity - - (13 433)

Less: Tax effect of perm anent differences:

(6 566)

- depreciation adjustm ents - capital gain on transfer of fixed assets

(1 642)

to unrelated entity - net difference on loss on transfer of

1 205

fixed assets to unrelated entity at nil value - inter company charges deductible by Pacenco Pty Limited but not assessable

5 418

to chief entity - - (846)

Tax losses not recognised as future income

- - (2 431)

tax benefit

Income tax adjusted for perm anent

2 431

differences - - -

In conjunction w ith th e M oom ba-Sydney Pipeline System Sale Act, fixed a s s e ts of P acenco P ty Lim ited c o m p risin g la te ra l p ip e lin e s w ere

tra n s fe rre d to a n u n re la te d e n tity for w h ich no c o n s id e ra tio n w as

received. For c a p ita l g a in s ta x p u rp o s e s u n d e r th e Incom e T ax

A ssessm en t Act th e co m pany is deem ed to have received m a rk e t value co n sid era tio n for th e d isp o sa l of th e a s s e ts w hen tra n s fe rre d on th is

b asis. To determ ine m a rk e t value, th e com pany can choose to obtain a detailed valu atio n by a qualified v aluer, o r com pute its own valu atio n based on reasonably objective and su p p o rtab le data.

29

PIPELINE AUTHORITY

11. INCOME TAX EXPENSE [continued]

D irectors of P acenco Pty Lim ited obtained a v a lu a tio n b ased on the

c u rre n t gas h au lag e c o n tra ct of th e new ow ner of th e lateral pipelines. W h ilst th e v a lu a tio n re p o r t o b ta in e d b y P a c e n c o P ty Lim ited

acknow ledged th e difficulty in v alu in g th e la te ra l pipelines sep arately from th e m ain pipeline system , th e rep o rt b ro u g h t forw ard a proposal for m a rk e t v alu atio n w hich w as accepted by D irectors of Pacenco Pty Limited a s reasonable and representative of m a rk e t value as required by th e Incom e T ax A sse ssm e n t Act. T hese v a lu a tio n s w ere u se d to

calculate th e ta x effect of the disposal of th e la teral pipelines.

The T axation Office accepted th e b a sis of calcu la tio n s of capital losses an d losses on disposal o f depreciated a sse ts in issu in g clearance for the liquidator to proceed to final liquidation of Pacenco Pty Limited.

12. EXTRAORDINARY ITEMS

By force of th e M oom ba-Sydney Pipeline S ystem Sale Act 1994 specified a ss e ts an d liabilities of th e A uthority and Pacenco Pty Limited ceased to be a s s e ts an d liabilities of th e A u thority or P acenco Pty Limited on th e

S ale D ay a n d b ecam e a s s e ts of a n u n re la te d e n tity (E ast-A u stralian

Pipeline Lim ited - EAPL). The Sale Day w as 30 J u n e 1994. F u rth e r

ex p en d itu re w as in c u rre d d u rin g 1995 w hich re la te d to th e se form er

a sse ts an d th is h a s been w ritten off to extraordinary item s.

Em ployee provisions for long service leave an d a n n u a l leave w hich were ch arg e d to th e p ro fit a n d lo ss in 1994 re la tin g to em ployees who

s u b se q u e n tly tran sferred to EAPL d u rin g th e y e a r ended 30 J u n e 1995 have been w ritten off to extraordinary items.

N otes to and forming part of th e financial accounts for th e year ended 3 0 Ju n e 1995.

Chief Entity Consolidated 1995 1994 1994

Loss on transfer of property, plant and

$000 $000 $000

equipm ent to EAPL (31) (167 850) (193 889)

Income tax applicable thereto " -

Loss on transfer of consum able stores to EAPL - (275) (275)

Income tax applicable thereto - - -

Profit on transfer of the liability for the provision for long service leave to EAPL 226 745 745

Income tax applicable thereto - -

Profit on tran sfer of the liability for the provision for an n u al leave to EAPL 136 449 449

Income tax applicable thereto - - -

30

PIPELINE AUTHORITY

12. EXTRAORDINARY ITEMS (continued)

Notes to and forming part of th e financial accou n ts for the year ended 3 0 Ju n e 1995.

Loss on cancellation of debts owed by Pacenco Pty Limited to the A uthority Income tax applicable thereto

Profit/(Loss) on write up /(down) of value of Pacenco Pty Limited Income tax applicable thereto

Profit due to appropriation to the A uthority from the Commonwealth for Commonwealth guaranteed debts Income tax applicable thereto

Profit due to appropriation to the A uthority from the Commonwealth to offset against the debt to the Commonwealth Income tax applicable thereto

Loss on write off of unam ortised discount on Commonwealth guaranteed debts Income tax applicable thereto

Total Profit (Loss) on Extraordinary Item s

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

- (5 151) -

215 (28 523) -

- 129 228 129 228

- 61 281 61 281

- (1 974) (1 974)

546 (12 070) (4 435)

13. PROFIT

(a) P u rs u a n t to su b -se c tio n 30(3) of th e Pipeline A uthority Act 1973, the A u th o rity h a s advised th e M in ister for R eso u rces th a t th e 1994-95

profit of $2,919 m illion sh o u ld be retain ed b y th e A uthority pending the expected abolition of th e A uthority w ith in th e 1995-96 financial year. The profit h a s b een re ta in e d a s A ccu m u lated F u n d s in th e Profit and

Loss S tatem en t in acco rd an ce w ith th is recom m endation.

(b) P u rs u a n t to su b -se c tio n 30(2) of th e P ipeline A uthority Act 1973 th e

M inister for R esources d eterm in ed th a t a n a m o u n t of $ 4 .0 m illion of

th e 1993-94 profit be allocated to th e C om m onw ealth.

14. PAYMENT OF SURPLUS MONIES TO THE COMMONWEALTH

S e c tio n 5 .5 of th e P ip e lin e A u th o rity (Policies a n d O bjectives)

D eterm in atio n N o:l 1995 provides th a t th e A uthority m u s t p ay to the

Com m onw ealth any m onies th a t th e A uthority considers m ay be su rp lu s to its operational req u ire m en ts. S u rp lu s a m o u n ts paid d u rin g th e year ended 30 J u n e 1995 totalled $ 1 1 ,8 4 4 m illion (1994 $Nil).

PIPELINE AUTHORITY

15. DIVIDENDS FROM SUBSIDIARIES

P u r s u a n t to se c tio n 30A of th e P ip elin e A u th o rity A ct 1973 th e

A uthority m u st pay to the C om m onw ealth a m o u n ts of dividends received b y it from s u b s id ia ry co m p an ies o th e r th a n s u c h a m o u n ts as are

specified by th e M inister in a w ritten notice given to th e A uthority. No su b sid iary com pany h a s declared a dividend in re sp e c t of th e financial y e a r ended 30 J u n e 1995 (1994 $Nil).

Notes to and forming part o f the financial accounts for th e year ended 30 June 1995.

16. RECEIVABLES

17.

18.

Chief Entity C onsolidated 1995 1994 1994

Current:

$000 $000 $000

Trade debtors 244 8 089 10 678

Other debtors 175 46 56

419 8 135 10 734

No provision for doubtful debts is required.

INVESTMENTS

Chief Q itity C onsolidated 1995 1994 1994

$000 $000 $000

At Cost: Current: B ank bills - 3 0 0 0 5 700

Short term money m arket 100 975 1 073

Inscribed stock - 3 3

100 3 978 6 776

Non Current: S hares in controlled entity - 5 928 -

OTHER ASSETS

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Current: Prepaym ents 1 ~ -

Prelim inary planning costs 324 2 276

1 324 2 276

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PIPELINE AUTHORITY

18. OTHER ASSETS [continued]

P relim inary plan n in g co sts re p re se n t co sts in c u rre d by th e A uthority to 30 J u n e 1993 and Pacenco Pty Limited to 1 M arch 1994 on a proposed

eth an e pipeline project from M oomba in S outh A ustralia to B otany in New S o u th W ales. On 1 M arch 1994 the A uthority entered into cost recovery a rra n g e m e n ts w ith ICI on th e u n d e rs ta n d in g th a t once final project

c o n tra c ts w ere executed co sts in cu rred to 1 M arch 1994 w ould be fully recovered. These c o n tra c ts w ere executed b y th e A uthority, ICI, E ast A u stra lia n Pipeline Lim ited an d o th e r p a rtie s on 15 S ep tem b er 1994.

The A u th o rity and Pacenco Pty Lim ited received full recovery of the

p relim in ary p lan n in g co sts of $ 2 ,276 m illion d u rin g th e financial year ended 30 J u n e 1995.

19. PROPERTY, PLANT AND EQUIPMENT

Notes to and forming part of th e financial accounts for the year ended 3 0 Ju n e 1995.

Chief Entity C onsolidated 1995 1994 1994

At Cost:

$000 $000 $000

E quipm ent 5 - -

Less: Accum ulated depreciation - - -

5

By force of th e M oom ba-S ydney P ip elin e S ystem S ale A ct 1994

property, p la n t an d eq u ip m en t com prising th e pipeline system ceased to be a s s e ts of the A uthority on 30 J u n e 1994 - see also Note 12.

CREDITORS

Chief Entity C onsolidated 1995 1994 1994

$000 $000 $000

Current: B ank overdraft - 532 532

Trade creditors 292 868 2 555

O ther creditors 437 5 -

Inter com pany creditor - 241

729 1 646 3 087

FINANCING ARRANGEMENTS

C hief E n tity C onsolidated 1995 1994 1994

$000 $000 $000

B ank overdraft facility 20 000 5000 5000

Am ount utilised

20000 5000 5000

22. PROVISIONS

PIPELINE AUTHORITY

Notes to and forming part o f the financial accou n ts for th e year ended 3 0 June 1995.

C onsolidated and C hief E n tity A llo cat­ A n n u al Long Redund­

ion to the C om m on­ w ealth

Leave Service

Leave

ancy

$000 $000 $ 0 0 0 $000

Current: Opening balance 1 Ju ly 1994 4 0 0 0 314 615 851

P aym ents (4 000) - - -

Charged to Profit and Loss W ritten off to E xtraordinary

(145) (363) (727)

Items - refer Note 12 Allocation to the

(136) (226)

Commonwealth - - - -

Balance 30 Ju n e 1995 - 33 26 124

23. REMUNERATION OF DIRECTORS AND EXECUTIVES

Chief Entity C onsolidated 1995 1994 1994

Aggregate am ounts received or due and receivable by part-tim e directors of the A uthority and Pacenco Pty Limited and the Chief Executive Officer of the Authority

$000 $000 $000

241 193 193

R em uneration bands:

No. No. No.

$0-$10,000 1 2 2

$10,000 - $19 ,999 3 5 5

$20,000 - $29,999 1 - -

$50,000-$69,999 1 - -

$90,000-$99,999 1 - -

$110,000 -$119,999 - 1 1

34

PIPELINE AUTHORITY

N otes to and form ing part o f th e financial accounts for the year ended 3 0 Ju n e 1995.

23. REMUNERATION OF DIRECTORS AND EXECUTIVES [continued]

Chief Entity C onsolidated 1995 1994 1994

Directors su p eran n u atio n and retirem ent benefits

Amounts paid to superannuation funds and directors in respect of the retirem ent of directors

$000 $000 $000

Ms E Proust 1 1

Mr J Shawley 1 1 1

Mr A C Sm art 15 26 26

Mr R E Comer 22 „

Dr S Richardson 1 2 2

Mr D McDonald 1 1 1

Mr P Fitzgerald 1 1 1

Chief Entity C onsolidated 1995 1994 1994

Aggregate executives

$000 $000 $000

rem u n eratio n

The n u m ber of executives whose rem uneration in connection with the m anagem ent of affairs of the A uthority is within th e following bands:

219 219

No. No. No.

$100,000 - $109,999 - 2 2

24. SUPERANNUATION

S ta ff o f th e A u th o rity a re c o n trib u to r s to th e C o m m o n w e alth

S u p e ra n n u a tio n Schem e (CSS) an d Public Sector S u p eran n u atio n Schem e (PSS). T he A uthority m eets its liability for th e em ployer sh a re of benefits payable u n d e r the S u p e ra n n u a tio n A cts by fortnightly p ay m en ts to the R etirem en t B enefits Office (RBO) in acco rd an ce w ith section 159 (2) of th e S u p e ra n n u a tio n Act 1976 a n d section 15 of th e S u p e ra n n u a tio n Act

1990. E m ployer c o n trib u tio n s paid $ 1 0 6 ,0 0 0 (1994 $ 9 13,000). The

D e p artm en t of F inance h a s advised th e R etirem ent Benefits Office that, for the p u rp o se of ac tu a ria l costings of th e CSS a n d PSS, it is essen tial to be able to identify em ployer s u p e ra n n u a tio n co n trib u tio n s m ade u n d e r each schem e by each organisation.

The s e p a ra te CSS a n d PSS em ployer s u p e ra n n u a tio n co n trib u tio n rates for th e A uthority are:-CSS m em bers 22.7% of sa la ry for su p e ra n n u a tio n purposes PSS m em bers 9.0% of sa la ry for su p e ra n n u a tio n purposes

35

24. SUPERANNUATION [continued]

T h e r a te s e x c lu d e th e p r o d u c tiv ity c o n t r i b u ti o n u n d e r th e

S u p eran n u atio n [Productivity Benefit] Act 1988.

In acco rd an ce w ith th e S u p e ra n n u a tio n B enefit (Interim A rrangem ent) Act 1988, a provision h a s been crea ted for th o se em ployees entitled to

receive benefits w ithin th e term s of th e above m entioned Act.

25. INVESTMENTS IN CONTROLLED ENTITIES

PIPELINE AUTHORITY

Notes to and forming part o f th e financial accou n ts for th e year ended 30 June 1995.

C ountry of Incorp­ o ra tio n

Book value of im m ediate chief entity investm ent

Interest of im m ediate chief entity

C ontribution to consolidated operating profit (loss) an d extra­ o rdinary item s after income tax

D irectly controlled by th e Pipeline 1995 1994 1995 1994 1995 1994

A uthority $ $ $ $ $000 $000

P acenco P ty L im ite d A u s tra lia - 5 928 347 - 100% - (19 895)

A d ix P ty L td A u s tra lia - 2 - 100% - -

G o ro d o k P ty L td A u s tra lia - 2 - 100% - -

See also Note 26.

PIPELINE AUTHORITY

Notes to and forming part of th e financial accounts for the year ended 3 0 Ju n e 1995.

26. DISPOSAL OF CONTROLLED ENTITIES

C onsideration Net Tangible Consolidated

Profit/(loss)

Interest of Im m ediate e n tity

A ssets at Date o f D isposal on

D isposal

1994/95 $000 $000 $000 %

By Sale:

Gorodok Pty Ltd

The en tity w as disposed of on 15 S eptem ber 1994 for th e nom inal value of its paid u p capital of $2.

By Liquidation:

Pacenco Pty Lim ited 6 144 6 144 - -

The en tity w as placed into v o lu n tary liquidation on 27 O ctober 1994. On 20 J u n e 1995 th e Liquidator m ade a first and final c a sh distribution of n e t assets of $ 6 ,1 4 4 million.

The final s ta tu to ry m eeting w as held on 11 A u g u st 1995 a n d the s ta tu to ry

re tu rn relatin g to th a t m eeting w as lodged on 14 A u g u st 1995. The com pany will be dissolved three m o n th s after th a t date.

By D eregistration

Adix Pty Ltd - - - -

The en tity w as deregistered on 15 May 1995.

1993/94

No d isp o sals occurred du rin g th e financial year.

In ro u n d in g to th e n e a re st th o u s a n d dollars am o u n ts elim inated during 1 9 9 4 /9 5 were: $ $ $ %

Sale of Gorodok Pty Ltd 2 2 - -

D eregistration of Adix Pty Ltd - 2 - -

37

PIPELINE AUTHORITY

27. ECONOMIC DEPENDENCY

AGL w as th e sole cu sto m er of the A u thority and Pacenco Pty Limited in re sp e c t of th e sale an d haulage of gas in th e pipeline sy stem during the

y e a r ended 30 J u n e 1994. From 3 0 J u n e 1994 th e A u th o rity and

Pacenco Pty Limited no longer owned th e se incom e p ro d u cin g assets.

G orodok Pty Ltd w as th e sole c u sto m e r of th e A u th o rity in resp ect of

c o n tra cts fee an d initial costs and co n tra c ts revenues received during the y ear ended 30 J u n e 1995 - see also Notes 3 & 4.

28. RELATED PARTIES

P e rso n s w ho w ere d irec to rs of th e A u th o rity a t a n y tim e d u rin g the

financial year were a s follows:

Mr J Shaw ley (Chairperson) Ms E P ro u st (Chairperson) Mr R A lderson (Deputy C hairperson) Mr A S m a rt (Chief Executive Officer) Mr R Com er (Acting Chief Executive Officer) Mr D M cDonald Mr P Fitzgerald Dr S R ichardson

P u rs u a n t to S ection 11 of the Act, th e M inister for R eso u rces appointed Mr Bill Handke of th e D epartm ent of P rim ary In d u strie s a n d Energy as a sta n d in g acting p art-tim e director of the A uthority, to act on b eh alf of the D eputy C hairperson in the case of unavoidable absence.

Ms E P ro u st resigned a s a director an d C h airp erso n of th e A uthority on 12 S eptem ber 1994 an d w as replaced as C hairperson by M r J Shawley.

Mr A S m a rt resig n ed a s a d irecto r an d Chief E xecutive Officer of the

A uthority on 31 D ecem ber 1994 and w as replaced by Mr R Comer.

Since th e end of th e previous financial y ear no d irecto r of th e A uthority o r its controlled en tities h as received or becom e en titled to receive any b en efits by re a so n of a contract m ade by the A u thority o r its controlled e n titie s w ith a firm o r c o rp o ratio n in w hich s u c h d ire c to r h a s a

s u b sta n tia l financial interest.

N otes to and forming part o f the financial accounts for the year ended 30 June 1995.

38

PIPELINE AUTHORITY

29. ADDITIONAL RELATED PARTY DISCLOSURES

Notes to and forming part of th e financial accounts for the year ended 3 0 Ju n e 1995.

T ra n s a c tio n s betw een th e A u thority a n d P acenco Pty Lim ited w ere on norm al com m ercial term s an d conditions no m ore favourable th a n those available to other p arties u n le ss otherw ise stated . C hief E n tity

Note 1995 1994

$000 $000

Interest paid by Pacenco Pty Limited on loan (a) - 535

Haulage fee paid for transportation of gas A dm inistrative services fee paid u n d er a Services (a) 1 131

152 A greem ent (a) 25

O perational and m aintenance fee paid (gj 1091 under a Services Agreement Consulting services fee paid u n der a Services Agreement Shares issued by Pacenco Pty Limited during the

(a) - 646

year - 34 352

Value of property, plant and equipm ent transferred to Pacenco Pty Limited (b) 37 952

Amount owing for revenue collected (c) - 241

Accrued interest owing on loan (c) 17

Trade creditor owing for paym ents fnl 550

5 500

under a Services Agreement Loan m ade during the year

ICJ (c) -

R epaym ents on loan Liquidator's first and final distribution of equity (c) - 917

in Pacenco Pty Limited (d) 6 144 -

(a) Services were provided by the A uthority a t cost.

(b) T he A uthority collected revenue an d p aid expenses on b eh alf of

P acenco Pty Limited d u rin g the year. S u ch am o u n ts w ere passed directly th ro u g h to Pacenco Pty Limited.

(c) All d eb ts owed by P acenco Pty Lim ited to the A u th o rity on the

Sale Day w ere cancelled on th e 30 J u n e 1994 by th e M oomba-

Sydney Pipeline System Sale Act 1994.

(d) Pacenco Pty Limited w as placed into volu n tary liquidation on 27th O ctober 1994 and a first and final c a sh d istrib u tio n of n e t assets

w as m ade by th e Liquidator on 20 J u n e 1995 - see also Note 26.

39

PIPELINE AUTHORITY

29. ADDITIONAL RELATED PARTY DISCLOSURES (continued)

O th er tra n sa c tio n s of D irectors and D irector related en tities

A director, Mr J E A Shaw ley is a d irecto r and sh a re h o ld e r of J. Shaw ley C o n su lta n ts Pty Ltd. The A uthority a n d Pacenco Pty Lim ited entered into co n tra c ts w ith J . Shaw ley C o n su lta n ts Pty Ltd d u rin g th e y e a r ended 30

J u n e 1994 in re sp e c t of co n su ltin g services provided for th e proposed

e th a n e pipeline project. The c o n tra c t w as b ased on n o rm al term s and

conditions.

Notes to and forming part o f the financial accounts for th e year ended 30 Ju n e 1995.

Chief Entity Consolidated 1995 1994 1994

$000 $000 $000

C onsultancy services - 93 93

30. LEASE AND HIRE COMMITMENTS

Lease com m itm ents d ue for office ren ta l are as follows:-Chief Entity Consolidated 1995 1994 1994

$000 $000 $000

W ithin one year Later th a n one year b u t not

100 530 530

later th a n two years Later th a n two years b u t not

100 100

later th a n five years - - -

100 630 630

31. ABOLITION OF THE PIPELINE AUTHORITY

By force of th e M oom ba-Sydney P ipeline S y stem S ale A ct 1994 all

re s id u a l a s s e ts and liabilities cease to be a s s e ts a n d liabilities of the

A uthority and becom e a ssets and liabilities of th e C om m onw ealth on the repeal day. R esidual in stru m en ts continue to have effect on an d after the rep eal day a s if a reference in th e in s tru m e n t to th e A u th o rity w ere a

reference to th e Com m onwealth.

R epeal day m e an s th e day notified by th e M inister in th e G azette for the p u rp o se s of P a rt 8 of th e M oom ba-Sydney Pipeline S ystem Sale Act 1994 or 31 D ecem ber 1996 w hichever o ccurs first.

40

PIPELINE AUTHORITY

32. EVENTS SUBSEQUENT TO BALANCE DATE

O ther th a n as reported in Note 31 th e re h a s n o t arisen in th e interval

betw een th e end of th e fin an cial y e a r an d th e d ate of th is re p o rt any

other item , tran sac tio n or event of a m aterial an d u n u s u a l n a tu re likely, in the opinion of th e directors of the A uthority to affect significantly the operations of the A uthority th e re s u lts of th o se operations, o r th e state of affairs of the A uthority in su b se q u e n t financial years.

Notes to and forming part o f th e financial accounts for the year ended 3 0 Ju n e 1995.

41

CERTIFICATE BY AUTHORITY DIRECTORS

The accom panying F in an cial A ccounts have been p rep ared in accordance w ith th e G u id elin es for F in a n c ia l S ta te m e n ts of C o m m o n w e alth A u th o ritie s

approved by th e M in ister for F in an ce, w h ich in c o rp o ra te s com pliance w ith the A ccounting S ta n d a rd s and in o u r opinion:

• show fairly th e operating re s u lt of th e A uthority for th e year ended 30

J u n e 1995;

• show fairly the sta te of affairs of th e A uthority as a t 3 0 J u n e 1995;

• show fairly the c a s h flows of th e A uthority for th e y e a r ended 30 J u n e

1995; and

• th ere are reaso n ab le grounds to believe th a t th e A u thority will be able to

p ay its d eb ts a s an d when they fall due.

The accom panying consolidated F inancial A ccounts:

• show fairly th e o p eratin g re s u lt of th e econom ic e n tity for th e year

ended 30 J u n e 1995;

• show fairly th e s ta te of affairs of th e econom ic e n tity a s a t 30 J u n e

1995; an d

• show fairly th e c a sh flows of th e econom ic en tity for th e year ended 30

J u n e 1995.

S igned th is tw en ty n in th day of S e p te m b e r 1995 in ac c o rd a n c e w ith a

reso lu tio n of th e A uthority.

RAY COMER Acting Chief Executive Officer

JOHN SHAWLEY Chairperson

42

COMMONWEALTH OF AUSTRALIA

Pipeline Authority Act 1973

Pipeline Authority (Policies and Objectives) Determination No. 1 of 1995

I, DAVID BEDDALL, Minister for Resources, after consulting the Pipeline Authority, make the following Determination under subsection 14A (1) of the Pipeline Authority Act 1973 setting out the policies and objectives that are to be carried out by the Authority for the purposes of performing its functions.

Dated

Minister for Resources

PART 1—INTRODUCTORY

Citation 1.1 This Determination may be cited as the Pipeline

Authority (Policies and Objectives) Determination, No. 1 of 1995.

Preamble 2.1 On 30 June 1994, under Part 2 of the Moomba-Sydney Pipeline System Sale Act 1994 (in this Determination, called “the Sale Act”):

(a) the Authority’s interest in certain assets (the Moomba to Sydney pipeline and associated assets) was transferred to East Australian Pipeline Limited; and (b) certain staff of the Authority were transferred to

employment by East Australian Pipeline Limited.

2.2 Under Part 7 of the Sale Act, the powers, functions and responsibilities of the Authority under the Pipeline Authority Act 1973 (in this Determination, called “the Authority Act”) were

43

94M196. 22/2/95, 94602467

2

modified to facilitate the wind-down of the Authority and its abolition by, at the latest, 31 December 1996. The main provisions are: (a) subsection 154 (1)—which repealed the existing section

13 of the Authority Act and substituted a new section 13 setting out the Authority’s new functions and empowering the Authority to carry on business for the purposes of performing those functions; and (b) subsection 154 (2)—which empowers the Authority to

carry on business for the purpose of finalising any business activities that relate to its functions under the former section 13 of the Authority Act; and (c) section 160—which repealed the existing section 28 of

the Authority Act and substituted a new section 28 setting out the Authority’s obligation to pursue a policy of acting in accordance with sound commercial principles in 3 sets of allowed circumstances.

2.3 The continuing business of the Authority is

acknowledged to be: (a) the construction of an ethane pipeline from Moomba in South Australia to Botany in New South Wales; and (b) finalising its business activities in relation to any assets

that cease to be assets of the Authority because of the Sale Act; and (c) the winding-down of the Authority’s business activities to facilitate the abolition of the Authority.

2.4 It is Government policy to effect abolition of the Authority as soon as: (a) in respect of the ethane pipeline: (i) construction of the pipeline has reached the

stage of practical completion: or (ii) all relevant States have given the clearances (however termed) necessary to enable Gorodok Pty Limited (referred to in this clause as “ICI”)

to complete construction of the ethane pipeline, and: (A) all necessary licences for operation of the pipeline are obtainable by ICI without the

Authority’s further involvement; or (B) exemptions have been obtained for, or granted to, ICI in respect of those licences; and (b) in respect of the Authority’s other residual business

activities—the proper finalisation of the winding-down of those activities is achieved.

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94M196,22/02/95, 94602467

3

2.5 It is also Government policy that the Authority must not undertake any business or assume any obligations or responsibilities except those necessary, convenient or reasonably incidental to the Authority’s completion of its involvement in the construction of the ethane pipeline or to its finalisation of the winding-down of other residual business activities.

PART 2— DETERMINATION

Policies and objectives—ethane pipeline 3.1 The policies and objectives of the Authority in

performing its functions in relation to its involvement in the construction of the ethane pipeline from Moomba to Botany are to meet its contractual obligations under the Construction Agreement, dated 15 September 1994, executed by the Authority, East

Australian Pipeline Limited, Gorodok Pty Limited and ICI Australia Limited.

Policies and objectives—other residual activities 4.1 The policies and objectives of the Authority in

performing its functions in relation to residual activities other than the activities referred to in clause 3.1 are: (a) to finalise its business activities (if any) in relation to its remaining and former assets; and

(b) to dispose of its subsidiaries in a timely manner; and (c) to wind-down its business activities generally to facilitate its abolition; and (d) to continue to give effect to its obligations in relation to

its staff in accordance with relevant laws, awards and certified industrial agreements.

Measures to be taken to achieve policies and objectives 5.1 In pursuing the policies and objectives described in clauses 3.1 and 4.1, the Authority must conduct its activities in accordance with sound commercial principles.

5 .2 The Authority should review on a regular quarterly basis its financial position in respect of: (a) the policies and objectives set out in this Determination; and

(b) its management of its known financial exposure; and (c) any unnecessary or unusual risk that it considers it may incur.

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5.3 Following each review under clause 5.2, a written report must be given to the Minister and to the Minister for Finance, that sets out: (a) in a form acceptable to the Minister for Finance—the

Authority’s financial position in respect of the matters described in paragraphs 5.2 (a), (b) and (c); and (b) progress made in finalising the winding-down of the Authority (including a description of matters that remain

outstanding).

5.4 The Authority should, in respect of its financial and operational requirements for the period that concludes on its abolition: (a) prepare; and

(b) at quarterly intervals, review; a plan that: (c) includes matters that the Minister notifies the Authority should be included; and

(d) presents financial estimates in a form that the Minister, in consultation with the Minister for Finance, considers acceptable.

[Note: The M inister proposes, in accordance with the G overnm ent's “Accountability and Ministerial Oversight Arrangements for Commonwealth Government B usiness E nterprises" (obtainable from the D epartm ent of Finance), to respond to the Authority within 60 days of receipt o f a plan, indicating w hether the plan, in form and content, is acceptable to the

Minister.]

5.5 The Authority must, from time to time, pay to the Commonwealth any moneys that the Authority considers likely to be surplus to its operational requirements.

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94X1196,22/02/95,- 94602467

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY PAPER No 351 of 1995 ORDERED TO BE PRINTED

ISSN 0727-4181