Power project costs up 75pc

The cost of building five new power stations and an associated gas plant in the north of Western Australia has increased by 76 per cent to an estimated $265 million, adding to the long list of projects suffering big cost blow-outs.

Brisbane company Energy Developments Ltd, which has been contracted by government utility Horizon Power to build the power stations, has also disclosed that the project is running up to six months behind schedule.

This week, the company said the project had been adversely affected by cyclones George and Jacob and continuing labour and resource shortages.

As a result, it has revised the project budget upwards by 15 per cent, the third budget increase in the past 10 months.

The project involves the construction of an LNG plant at Karratha, four gas-fired power plants at towns in the Kimberley, including Broome and Derby, and a small diesel power plant.

Managing director Chris Laurie said site evacuations ahead of the cyclones and the wet weather had delayed construction of the LNG plant.

“These delays have been exacerbated by an ongoing resource and accommodation shortage at Karratha,” he said.

The lack of accommodation in Karratha had made it more difficult for the company to mobilise extra staff.

Illustrating the scale of the problem, Mr Laurie said Energy Developments had been forced to transfer some of its less critical staff out of Karratha last week simply to provide beds for LNG commissioning staff.