Key Points:

A Hamilton company which has spent a lot of money developing on-demand hydrogen generators today denounced the technology as a fraud.

Michael Fresnel, co-founder of OctaFuel New Zealand, made the admission in a statement today, two days before a Hamilton motoring writer, Eric Otoka, was planning to disclose results of his trial of the OctaFuel hydrogen fuel system designed to reduce petrol consumption.

Otoka was going to go public in his Loose Nut column in Waikato Times motoring section on Thursday, and say his trial found the generators did not work.

But Mr Fresnel said today his company now "believes the technology is a fraud, and advises New Zealanders to avoid spending money online buying on-board hydrogen generators and instruction manuals on how to build them".

He said OctaFuel had been persuaded the technology was genuine because of a number of international studies supporting it.

"It came as a shock to discover that the technology did not save fuel," he said. "No one likes getting the wool pulled over their eyes."

The experience had been humbling, but going public was the right thing to do, "despite the embarrassment factor", he said.

OctaFuel spent three months work and about $100,000 on the development of an on-demand hydrogen unit, contracting a mechanical engineer with more than 25 years' experience and a reputable electronics company to undertake the research, development and manufacture of the technology.

The OctaFuel equipment was professionally installed by mechanics and the unit was trialled in two customers' vehicles and by OctaFuel, Mr Fresnel said.

In addition to its own research and development, OctaFuel accepted participation in a Waikato Times trial over a five-week period, during which OctaFuel continued its own trials.

"OctaFuel's team of advisors were not sure the product had been tested thoroughly enough in-house, but the feedback seemed positive, with reports of between 20 per cent and 25 per cent fuel savings, so the decision was made to proceed with a public trial," he said.

But later installations in a number of customers' vehicles and the Waikato Times trials "showed that on-demand hydrogen technology is a fraud".

Mr Fresnel said the company would continue exploring hydrogen as a primary fuel for motor vehicles, including reforming of methane from rubbish dumps to hydrogen gas, which can be used to fuel cars.