Labour's State Owned Enterprises spokesman Clayton Cosgrove said documents released by the Treasury revealed the Government will use $100 million of Mighty River Power (MRP) asset sales for the ''recovery'' of Solid Energy.
However, Finance Minister Bill English countered that the $100 million earmarked to assist Solid Energy was a short-term stand-by facility, which had not yet been activated, and if it were, the Government would get the money back.
Once also earmarked for partial sale, Solid Energy fell from grace last year in the face of plunging coal prices, which threatened its viability.
It had to close or mothball mines across the country, laying off about 450 staff, and posted an almost 150% profit turnaround to a $40 million loss, while carrying an estimated $390 million debt.
Solid Energy's future remains under a cloud, but the scheduled release of its full-year to June report at the end of August should give a clearer picture of its future.
Mr Cosgrove said yesterday Solid Energy was held up by the Government ''as the jewel in the asset sales crown''.
'' It's a sad irony then that cash from National's asset sales sell-off is now having to be used to prop up the company because of the Government's mismanagement.
''This is a cover-up gone wrong,'' Mr Cosgrove said of some documents which had blanked out references to Solid Energy.
He said the Cabinet had agreed to spend $616 million of the Future Investment Fund (FIF) on: Christchurch hospitals rebuild ($426 million), investing in irrigation infrastructure ($80 million), a National War Memorial Park ($10 million), as well as one ''redacted'' [edited out] project.
Mr English said if there was a call on the FIF for a loan it would be secured against Solid Energy's assets and the Crown would get its money back, he told BusinessDesk.
''There was an amount set out in the supplementary estimates on Budget day as a secured, short-term stand-by facility to ensure Solid [Energy] could continue paying its bills while negotiations about its future continue.
''It is certainly not a long-term capital investment facility and it hasn't been used to date,'' Mr English said.
While the Government has made play of the FIF's intended use to fund schools, hospitals and other big ticket public assets, it is not the first time a troubled SOE has been identified as a beneficiary of FIF funds.
The 2011 and 2012 Budgets between them contained funding of $344 million for upgrades to the national rail system through KiwiRail, the national rail carrier, renationalised during the term of the last Labour-led government, BusinessDesk said.
