MUNICIPAL GASWORKS.

Gisborne Times, Volume XXVI, Issue 2163, 11 April 1908, Page 2

MUNICIPAL GASWORKS.

„ BAI T 0 BUY out the PnOPOS (oCAL COMPANY. \ "SS?*: ies yesterday . . u 0 found taining the exact pomtuni. w i om ht! that seven l Uvorably disposod torS AjWr Jrto ™ Son Well y tin. results of tin. St ifUltSI works and ” s £2ooo 3 j ii 1900. and Sdrto?! S°.» advantage of supplying If strict ,°rdir«°n» ft. S „t .c*p“tSl 'cost,of «Wg. •md is able, after paying tho inbusiness of £4OO. 'lbe Lyttelton uo rough Council, which purchased its gasworks from a private company a few years ago, has had no cause to regret tho stop, for since. the-muni-cipality assumed ownership tho sor vice has immensely improved whilst the ratepayers are receiving a Aeij handsome return on the outlaj U The position of the Gisborne Gas Company is looked upon as a fortunate one for its shareholders, as for the past twenty years they have held tho entire and undisputed monopoly Of tho supply of the town. The Act empowering the company to com mence operations was passed in loo*and when read . carefully seems to have been especially framed to pro tect the interests of in every possible way. Power is given to break up streets, bridges, culverts or anv other Council property for the purpose of laying mains, and while the Council has power to prevent any nuisance arising from the work of tlio company, there is no nuthontj to restrain gasworks employees horn breaking up the footpaths or roads at any time they may think fit. Jhe shareholders aro permitted to receive a. profit of twenty per cent for each and every vear before the Council can compel'a reduction to be made in the price to tho consumer, and should the profits exceed twenty pei cent in any one year they can be used to make up the deficiency in profits in any previous year or years, before a demand for a-reduced price can be mado. The Legislature of 1884 which 0-ranted the company s charter failed to insert a clause in the Act empowering tho ratepayers to acquire the company’s property at any time, with the result that an enormous gas business has been built up on a small outlay ol capital, paying large dividends, and continuing absolutely free from competition The position of the Gisborne Gas Company’s shares on the market is indicative of what a profitable investment the gasworks has been. Tho authorised capital of the company was 25,000 shares of £1 each; hut of these 7700 are still held in reserve, 17.300 only being issued. These, at a capital value of £1 each, are quoted at £2 12s on the Auckland Stock Exchange, and have on occasions icaclied a higher figure, very little scrip changing hands. At their maiket price the shares show a return of about 5 per cent on the investment, and in these days of wild-cat securities safe stocks—and Gisborne Gas the considered safe —are eagerly sought after. The balance-sheets of the company for tho past two years are exceedingly gratifying from the point oi view of" the shareholders. The profits in 1906 amounted to £SBOB 11s sd, or nearly twenty-five per cent oil the capital invested. Out of this a dividend of 12i per cent was paid and last vear were even better, being over £IOOO carried to reserve. The profits 33 per cent on the invested capital; a dividend of is Gd per share or 15 per cent was paid, and £IOOO again placed to reserve. The consumption of gas m 190 1 showed an increase of 14.42 per cent over that of 1906, and more than double that of 1903. The net price in Gisborne is 7s Id per 1000 feet for light and 6s 4Jd, against 5s and is 6d in Auckland, 5s 9d to 4s_ in Christchurch, and 6s 3d to 5s in Dunedin, the lowest price ill each case being that charged for use for power purposes. The shares of the Gisborne Gas Company are nearly all held by persons in other parts of the Dominion, only about twelve shareholders residing in the district. It will therefore bo seen that these persons are collecting large dividends on a small outlay with no trouble nor risk.

It is pointed out that the prosperity of the Gisborne Gas Company is duo in a, great degree to the prosperity of Gisborne and the surrounding district; to the vast amount of public and private money that has been used to develop the town and attract a settled and prosperous population. Upon all this the shareholders in the company are reaping a largo unearned increment, far and away beyond the ordinary earning power of money, simply because they have a. monopoly of a daily commodity and there is none to dispute their claim. The question of acquiring the gas works by the ratepayers has been, in times past, considered by the Gisborne Borough Council, but no proposal has ever definitely been put before the company. Compulsory acquisition is out of the question, as there is no provision in the enabling Act for that; but there is not, on the other hand, any provision to preclude the ratepayers erecting another gas works and entering into competition with the company. With the present population of the town, this proposal is in business circles looked upon' as almost impracticable, and the question, if the ratepayers desired to acquire the gasworks,' would be upon what basis a purchase of existing interests could be brought about. The bargain would resolve itself into a straight-out business transaction, for the borough has no power to force a sale, nor has the company at present shown any desire to part with their works To bnv the shares in the open market at their present quotations would involve an expenditure that is considered unreasonable, and the only alternative left appears to bo to try to come to terms with the company An -important aspect of the question is that any proposal to erect another gas works would perhaps have tho effect of depreciating the market value of shares, and they might thus bo acquired cheaply, but'the question would remain as to whether this was a strictly honorable course to adopt

THE MAYOR’S VIEWS. In a talk on tho subject with a “Times” reporter, the Mayor (Mr. John Townley), who is also 'a director of the Gas Company, said ..that as fains lie knew the company was prepared to consider an offer from the Council whenever oue was made. In his opinion the company held a monopoly ; but whether that monopolv eould be upset was a question of law. • a" works were one of the best ami most up-to-date for their size in the jfoimmon, the gas was of good quality. ami there was nothing shoddv in the wars of tho whole comnany. * He admitted that tho price of gas was higher than m many other towns, but said that coal was tho regulating medium, and a reduction could not bp made until coal reached a reasonable price. He was not opposed to the principle ot municipal ownership, but thought more important works, such as a drainage scheme and an on ter harbor should have preference. DR. WILLIAMS’ VIEWS. Asked to express his views on the subject, Hr. -Williams said that lie approved of tho principle of municipal ownership an tlio abstract., and thought the ratepayers should control

such supplies as water, gas, and dec- « trie light;', fai* private ownership meant thwfr supplies could, if the emergency aYOta}*,, buy cut off at the will or option of oUe or more individuals. 11 it was tho\v<;jht desirable to buy out the Gisborne Gas Company a loan would have to bo raised, but he would not favor; paying the company a profit of LZ'Sf OOu npon their invested capital, an represented by tho market pneo of the (hares, though ho recognised tho shareholders wore entitled to some compensation. Tho main question wan—what wan a fuir figure? and the fact that tbo prosperity of the company was duo almost exclusively to the prosperity of tho district would have to he taken into account when a purchase was contemplated. It tie gas was owned by’tho borough it would mean cheaper supplies and nioro street lamps. Whatever price ivas paid, said tho doctor in conclusion, the ratepayers would need to see that there was a fair prolit assured on the outlay.