In what has become almost standard practice with energy chiefs, Martin criticised the government for the growing trend of "regulatory creep" and the almost conflicting aspirations of economic growth alongside increased environmental standards, particularly in the light of the Kyoto Protocol.

Martin is reported as saying tensions could increase in the changing New Zealand energy landscape.

Replacement gas reserves were being found but at a rate "substantially below consumption", though NGC, with its gas processing and pipeline infrastructure, was well placed to work with smaller explorers in bringing those smaller new reserves to the market.

However, he was concerned at a trend of regulatory creep, with gas transporters now subject to a Commerce Commission pricing review.

Martin also attacked the Government's new legislation providing for far-reaching regulation of the gas industry, should it fail to agree on a self-governance structure, and said the industry was already making significant progress towards setting up a governance regime by next November.

Meanwhile, shareholders backed a $NZ525 million capital return plan and should receive the payout in December.

The return is to be done through a cancellation of three of every seven shares, with shareholders being paid $NZ1.58 for each cancelled share, after High Court initial approval of the "scheme of arrangement" and the Inland Revenue Department confirming the return will not be treated as a dividend.

However, NGC will seek a final ruling from the court before distributing the money, which will be tax-free to most shareholders.

The payment is the result of NGC essentially quitting the electricity sector after its disastrous foray into electricity retailing during 2001.

The $NZ525 million capital return will be funded through existing debt facilities and a $NZ200 million retail bond issue with an interest rate of 6.8%.

Martin said it would be inefficient for a company to have no debt. Returning $NZ325 million to shareholders and not issuing the $NZ200M of bonds would not achieve the optimum capital structure NGC wanted.

Shareholders also approved a 33% increase in directors' fees, to $400,000, and voted to remove a retirement payment provision.

NGC directors will have to buy at least 5000 NGC shares to align their interests with shareholders and will be encouraged to buy more. Current director Sir Ross Jansen is stepping down after 12 years.