Alinta back and bidding

Alinta is believed to have teamed up with Alcoa and Macquarie Bank to lodge a joint bid for the Dampier to Bunbury Natural Gas Pipeline.

Their 11th-hour return to the bidding process adds extra competition to the two other bidders, understood to be Australian Pipeline Trust and an Envestra consortium.

Alinta and Alcoa first signalled their interest in a joint bid last September, when Wesfarmers was also involved in discussions.

Last year’s joint discussions lapsed after a few months but industry sources have told WA Business News that Alinta revived its involvement recently.

A spokesman for Alinta said he was unable to comment and WA Business News was unable to obtain any comment from Alcoa or Macquarie.

There is a clear strategic logic in Alinta, which has made a string of acquisitions under managing director Bob Browning, and Alcoa teaming up.

They are currently two of the pipeline’s major customers and are keen to see its capacity expanded.

They need extra gas so they can establish further co-generation power stations and Alcoa will also be seeking extra gas to support expansion of its alumina refineries.

The deadline for bids for the pipeline, which was placed in receivership by a consortium of banks owed $1.85 billion, is August 27.

Wesfarmers Energy managing director David Robb said he was not in active discussions regarding the pipeline and was focused instead on bidding for a new base load power station.

Western Power announced this week that five companies were left in the bidding for its planned 300-megawatt, $350 million power station.

This includes WA’ s two coal companies, Wesfarmers Energy and Griffin, and three other bidders – Singapore company SembCorp Utilities, a Transfield Services consortium, and a joint venture between investment bank Babcock & Brown and private Queensland company ERM Power.

TransAlta Energy and John Holland dropped out of the bidding.

Progress on the 300MW baseload power station follows Energy Minister Eric Ripper’s decision last week to reject Western Power’s plan to build a separate 240MW baseload power station at Cockburn.

“The most recent forecasting suggests there is insufficient growth in baseload demand to justify the Cockburn 2 power station on top of existing government plans for a new baseload power station and other private sector proposals,” Mr Ripper said.

Instead, he announced that Western Power would build a new peaking power station at a cost of about $100 million.

To encourage private development of power stations, Mr Ripper said the government would impose conditions on Western Power’s ability to invest in a new plant.

Western Power chairman Neil Hamilton said “our expectation is that they will cap us at roughly the size we are now”.

This would allow Western Power to upgrade or replace its existing capacity but not build new capacity.

Meanwhile, the Government’s moves to encourage the sale and expansion of the DBNGP have met with a mixed response.

Mr Ripper is proposing the stamp duty received from sale of the pipeline would be invested in expansion of the pipeline.

This is effectively a $110 million sweetener for bidders.

Chamber of Minerals and Energy chief executive Tim Shanahan praised the Government’s “pragmatic response to a critical situation”.

Chamber of Commerce and Industry chief executive John Langoulant said the Government may have set an imprudent precedent.