Fuel Tax Bill causes biofuels shares to slump

TAX credits for petroleum fuel consumption provided in the Fuels Tax Bill 2006, passed by parliament last week, have already impacted some players in the biofuels industry, with shares in Australian Renewable Fuels falling more than 4% on Friday and more than 25.4% in today's trading.
Fuel Tax Bill causes biofuels shares to slump Fuel Tax Bill causes biofuels shares to slump Fuel Tax Bill causes biofuels shares to slump Fuel Tax Bill causes biofuels shares to slump Fuel Tax Bill causes biofuels shares to slump

Shares in ARFuels, which has two existing biodiesel plants in Adelaide and Western Australia, had climbed above $A2.30 last month but have been in steady decline in the lead-up to the vote on the Fuel Tax Bill, said to remove the competitive advantages biofuels had been awarded through alternative fuel tax subsidies.

The ARFuels board released the following statement on Friday: "The nature of the changes are contrary to assurances provided to the company by members of Government and appear to be at odds with stated government policy to encourage the industry."

The company said that the new fuel legislation would force the company to re-examine its plans for expansion in Australia, but said its plans in Europe and North America would not be affected.

ARFuels said it would mount a media and lobbying campaign to "encourage the Government to provide the [biofuels] industry what it was promised".

The Australian Biodiesel Group has also been hit hard by the fuel tax legislation, falling 6.92% on Friday and another 11.5% in this morning's trading.

Relative ASX newcomer Mission Biofuels, which plans to produce biodiesel in Malaysia for the European market, has been unaffected by the news, with no movement in today's trading.

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