Dual Gas has stopped work on its project to build a new power station in Victoria, saying its future has been put into the federal government's hands.
A company has stopped work on its project to build a new Victorian power station despite winning a legal battle to double the plant's size.
HRL Limited subsidiary Dual Gas said a new condition imposed by the tribunal which gave the brown coal and gas-fired plant the all-clear had effectively put the project's future in the hands of the federal government.
The Victorian Civil and Administrative Tribunal (VCAT) last month gave Dual Gas the green light to build its 600-megawatt plant in the Latrobe Valley, but imposed a condition that works can't begin until an equivalent amount of higher greenhouse-gas-emitting electricity generation is retired.
Dual Gas general manager Paul Welfare said satisfying the condition was beyond the company's control.
"VCAT in granting approval for a new 600 MWe project has also imposed a new condition that effectively puts the future of the project in the hands of the Australian government and takes the commencement date out of the company's control," Mr Welfare said in a statement on Monday.
"As a consequence of the imposition of the condition, there is considerable uncertainty as to the date on which construction of the project could commence, if at all if there is no contracts for closure."
The Environment Protection Authority last year approved Dual Gas' application to build the Morwell plant, which would use coal gasification technology, but limited the capacity to 300 megawatts, half what the company wanted.
Several objectors asked VCAT to review the decision but Dual Gas successfully had the 600-megawatt capacity reinstated.
Dual Gas said the new VCAT condition meant the federal government must sign one or more contracts ensuring the closure before 2020 of 600 megawatts of coal-fired power in the Latrobe Valley before the company could begin constructing its plant.
The Latrobe Valley's brown coal-fired power stations provide most of Victoria's electricity and two, Hazelwood and Yallourn, are deemed to be among Australia's largest polluting electricity generators.
The federal government is seeking expressions of interest to phase out 2000 megawatts of the dirtiest power generators by 2020.
The commonwealth has committed $100 million to the Dual Gas plant and the Victorian government $50 million.
Green group Environment Victoria called on the federal government to withdraw its grant and confirm there will be no further extension of HRL's grant funding.
"The only thing certain about this project is that if it goes ahead it will increase Victoria's greenhouse pollution by millions of tonnes each and every year,"
Environment Victoria campaigner Victoria McKenzie-McHarg said in a statement.