Reports on Rio Tinto plans to sell off smelters will focus New Zealanders on the power price contract again.

The NBR report assumed that the Tiwai point smelter (and its tied power station – Manapouri) were government initiatives. That may be a wide-spread misconeption, perhaps a tribute to the power of former National PM Muldoon's populist campaign against Comalco when he caused New Zealand to renege on its long term smelter power contract.

The smelter and power station were not legacies of think big. The smelter and Manapouri were the brainchild of the smelter company engineers. The government became involved only because the power station was in a National Park.

The government insisted that the company underwrite the finance for the power project in return for a long term fixed price contract for the power, which otherwise would have been surplus to NZ requirements at that time.

Muldoon's contribution was confined to unilaterally reneging on the power contract many years later. Among other consequences of that down the track was that the NZ government was obliged to carry the risk of think big's Synfuels plant and NZ Steel. That is because their sponsors decided that Muldoon's actions made NZ third world in terms of investment risk – so they would not put plants here hostage to NZ Government willingness to renege on contracts.
 

Muldoon may have gained a few hundred million on the power price. The cost to New Zealand was over $5bn lost when the think big risks matured. The sponsors had initially expected to own and carry the risks of the projects, but laid them off to us after studying Comalco's experience.