It is understood that the Tasmanian Government will now hold discussions with potential proponents and offer up to $30 million to prop up any private-sector development

With the private sector turning its back on building a gas reticulation system in Tasmania because of "marginal economics", the Australian Gas Association and other industry lobby groups are once again calling on the Federal Government to urgently review the National Gas Code.

The Australia Gas Association said the failure of the tender process showed the National Gas Code was not working.

"The National Gas Code requires urgent review and significant amendments to ensure it does not continue to deter investment in the development of Australia's gas network," chief executive Bill Nagle said.

Echoing the sentiments of the AGA, the Australia Pipeline Industry Association (APIA), last week said that investor sentiment in the gas transmission pipeline sector was being adversely affected by major deficiencies highlighted in a report on the National Access Regime by the Productivity Commission.