Terra Gas Trader Pty Ltd (Terra Gas Trader) was incorporated under the Corporations Law in June 1998. On the restructure of the State’s electricity businesses in October 1998 assets, liabilities and staff were transferred to the Company. For financial statement purposes the transfers were deemed to have taken place from 1 July 1998.
Pursuant to a Ministerial Transfer Order dated 23 March 2000, the shares in Terra Gas Trader held by SA Generation Corporation were transferred to the Treasurer as a body corporate.
Under the Government’s electricity business disposal program, Final Bids for the disposal of Terra Gas Trader were received 17 July 2000. As at the date of the preparation of this Report, no announcement had been made with respect to the outcome of the disposal process for Terra Gas Trader.
The nature and scope of operations as set out in the Charter of Terra Gas Trader include:
the acquisition, haulage, storage and supply of petroleum products;
trading in the energy market by buying or selling petroleum products;
trading in petroleum haulage rights;
trading in financial instruments or derivatives that relate to petroleum and electricity.
A dividend of $18 million (nil) was paid during the year.
In accordance with section 31 of the Public Finance and Audit Act 1987 and subclause 13(3) of the Schedule to the Public Corporations Act 1993 the Auditor-General may at any time, and must in respect of each financial year, audit the accounts and financial statements of Terra Gas Trader Pty Ltd.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal controls. The scope of the audit included the review of controls over the revenues and payments associated with Terra Gas Trader’s gas transactions.
Following the completion of the audit a management letter was forwarded to the Chief Executive Officer of the company detailing findings and recommendations arising from that work. Copies of the letter were provided to the:
Chairman, Board of Directors, Terra Gas Trader;
Manager, Internal Audit, Terra Gas Trader.
A satisfactory response was received for all matters raised.
Work undertaken by Audit during the course of the year indicated that the company had maintained a sound internal control environment. In particular there are a number of strategic initiatives which underpin this environment, including:
regular Board meetings during the year provided a forum to oversee the financial reporting, auditing and legal compliance processes in relation to the company. Representatives of the Auditor-General were invited to attend selected Board meetings to discuss matters relating to the audit of the company;
an Internal Audit function which reports directly to the Board of Directors.
Banked Gas is the value of inventory held due to ‘take or pay’ contractual arrangements. ‘Take or pay’ contracts are an arrangement whereby the purchaser pays for gas at an agreed minimum quantity each year. If at the end of the year the minimum amount of gas has not been taken, the company has the right in future periods to take the shortfall.
As at 30 June 2000 the book value of banked gas was $19.3 million ($26.9 million) representing the quantities banked and the value of its estimated recovery.
The decrease in banked gas during the year was due mainly to gas sales above the minimum contractual purchasing quantities allowing Terra Gas Trader to ‘take’ a portion of the banked gas.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of Terra Gas Trader Pty Ltd included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.
Audit formed the opinion that the controls exercised by Terra Gas Trader Pty Ltd in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.