Metal recycling company Smorgon signed a gas distribution agreement that will see the company at Bell Bay (north of Launceston) connect to Powerco's network when construction is completed next month.

Aluminum powder manufacturer Ecka Granules has signed a commercial term sheet for Powerco to supply natural gas to its Bell Bay plant.

Pharmaceutical processor Tasmanian Alkaloids has signed a Memorandum of Understanding that will see the company invest in gas-fired plant and Powerco build the necessary infrastructure to connect the company to the transmission pipeline.

The agreements were signed in Tasmania earlier this week by Powerco chief executive Steve Boulton, who also delivered a key note address at a national power conference and met senior power industry officials and potential customers.

Boulton said the arrangement with Smorgon meant the Bell Bay network currently under construction would be utilised as soon as it was commissioned.

Smorgon manager David McGuire said the availability of natural gas would mean lower operating costs for his company and the ability to use a more environmentally-efficient fuel.

Under the Ecka Granules deal, Powerco will upgrade Ecka's metering and connection facility and to allow connection to the Bell Bay network. Ecka managing director David Williams said the proposed modifications would enable his company to have a high reliability gas supply at competitive pricing for its planned expansion.

Tasmanian Alkaloids operations director Tol Sereda said the use of natural gas as a fuel would improve the company's environmental performance and, subject to finalisation of contract terms, the existing boilers should be converted to use natural gas by next April.

Detailed planning for construction work on the Tasmanian Alkaloids off-take station and pipeline to its plant will start immediately, with gas being available from the end of March.

Boulton said all arrangements confirmed that the availability of competitively priced gas would contribute to sustainable growth and expansion within the island state's industrial sector.

"The deals endorse our view that we are heading in the right direction as we work to rapidly progress the network construction program and make natural gas available to as many of the larger industrial companies as possible. Discussions with other potential large users are continuing and we are confident of announcing further connections over the coming months," he added.

Last April Powerco signed a development agreement with the Tasmanian government to rollout a 100km gas distribution network, which is due for completion in early 2005, to over 20 major industrial and commercial customers.

Then in September the parties announced an agreement to extend gas into specified residential and commercial areas, making gas available to approximately 38,500 smaller gas users. This phase is scheduled to start before February 2005 and be completed before April 2007.