Rebate cuts would force closure of Southern Oil Wagga plant.

By Olivia Shying
Updated April 16 2014 - 9:12am, first published April 15 2014 - 9:30pm

Southern Oil may be forced to close its Wagga refinery if proposed changes cutting rebates in half go ahead.

Currently, refineries that recycle oil to the highest standard receive a 50 cent government rebate for every litre they process, new changes would see this slashed to 25 cents.

Mr Rose said Southern Oil had invested substantial money into recycling resources, particularly in the new multimillion-dollar Gladstone refinery, on the understanding it would get a rebate.

"We invested a heap of money for a new plant, if this change happened there wouldn't be enough money and one would have to go," Mr Rose said.

With the Wagga plant older and more dated, Mr Rose said he would have no choice but to close the refinery - resulting in another manufacturing loss for Wagga.

Clearly distressed at what he defined as a 'betrayal' by the government, Mr Rose said he was hopeful a better decision would be made.

"I still hope they won't make rash decisions," Mr Rose said.

In a letter sent to Minister for the Environment Greg Hunt, Mr Rose raised multiple concerns including alleged mismanagement of the scheme, stating that many companies that were not category one certified had been successfully claiming the benefits.

"At 50 cents per litre, this equates to about $10 million to $12.5 million per annum, which is being paid to category one oils that are not category one oils."

"Absolutely this distresses me, the schemes have been mismanaged and they have not gone out and verified (the practices)," Mr Rose said.

The people who have invested money to do the right thing are potentially being punished," Mr Rose said.

Mr Rose said discussions with Member for Riverina Michael McCormack had been beneficial and he hoped they would continue.

Mr Rose said there was no doubt closing the Wagga plant would have a negative impact on the community, with the company injecting $15 million into the region each year as well as providing 35 full-time and other contractor jobs.

"Why would you risk the money? As a business this is the last thing you need."

Commenting on the issue, Mr McCormack referred to a speech he delivered to Parliament recently.

Recounting his visit to the opening of the new Gladstone plant in February, Mr McCormack described Southern Oil's investment and projects as the future of waste oil management.

"Once fully operational this re-refinery will reduce Australia's greenhouse gas emissions by 290,000 tonnes per year," Mr McCormack said.

Referring to Mr Rose as a good entrepreneur, Mr McCormack said he was keen to see a good result for Southern Oil saying he would do everything in his power to see the Wagga plant stay.

A decision on the rebate is expected in August.