08/06/2004 - 22:00

Kimberley power delay costs could be $16m

08/06/2004 - 22:00


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DELAYS to the controversial West Kimberley power project look likely to cost the Western Australian Government at least $16 million.

Kimberley power delay costs could be $16m

DELAYS to the controversial West Kimberley power project look likely to cost the Western Australian Government at least $16 million.

Western Power is losing at least $2 million a month, based on figures from before the recent world oil price hike, to supply power to Broome, Fitzroy Crossing, Halls Creek, Derby, Camballin and surrounding areas.

Queensland-based Energy Developments Limited was awarded single bidder status to build a Liquefied Natural Gas plant at Karratha and power stations in the five West Kimberley towns on October 17, beating the Avon Resources-backed Kimberley Power’s bid.

Western Power regional procurement manager Mark de Laeter said an extension of the bid process, the complexity of the contract and construction problems endemic to the Kimberley’s wet season had led to an eight-month delay in getting the power stations built.

EDL was due to sign the 20-year power procurement agreement, worth more than $600 million, in April. The Government now hopes to have it signed by June 30.

Mr de Laeter admitted Western Power would still be losing money in the Kimberley, just not as much.

West Kimberley residents are watching the process with interest. Each of the five towns is facing power reliability problems due to their ageing generation plants.

Broome Shire president Tom Vinnicombe, who was also a member of the power procurement panel, said the delays were a concern.

“Our major concern in the short term is the quality of power. They [Western Power] can continue to meet the demand by adding more modules to the power generator here but it’s a patched together system that’s unreliable,” he said.

The West Kimberley power procurement process has been an interesting one for energy watchers.

Perhaps best remembered are the persistent attempts to bring tidal power into the equation.

The then Liberal Government pulled the plug on the tidal project in favour of an LNG-fired option led by Maurice Brand’s Energy Equity in partnership with Woodside subsidiary Metasource.

That project had trouble raising finance and when the Gallop Government came to power tidal power was again back on the agenda.

A new process was started but the tidal power proponents declined to enter a bid, leaving the field to Mr Brand who returned with the Kimberley Power proposal for gas-fired stations in competition with EDL’s plan.

When EDL won the bid, Avon Energy accused Western Power of mishandling the process, claiming EDL had dramatically lowered its price to come closer to that of Avon Energy.

Western Power denied Avon Energy’s claims, saying the process had been open, competitive and supervised by a probity auditor.

The proposed break-up of Western Power has also added another level of complexity to the process, raising the question of who would be paying EDL.

Mr de Laeter said an assignment clause had been included meaning that whoever took over power in the region would be assigned the payment requirements for the contract.

The present model for Western Power’s disaggregation has a government-owned regional power body taking that responsibility.


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