Latrobe City remains upbeat about the future of HRL's proposed Morwell dual gas-fired power station despite Monday's announcement project development had been "frozen", fuelling ongoing speculation about the plant's future.
In a surprise announcement on Monday, HRL said design and pre-construction work on the power plant had been halted as a result of a legal condition imposed on the project by the Victorian Civil and Administrative Tribunal earlier this month.
VCAT gave the project full works approval for its proposed 600 megawatt generating capacity on the condition construction could not commence until the Federal Government has entered into contracts under its 'Contracts for Closure' program, or through any similar program or commercial agreement.
"(VCAT's condition) 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," Dual Gas general manager Paul Welfare said in a statement.
The Contract for Closure process intends to secure contracts with existing generators by 30 June to decommission 2000 megawatts of generation capacity by 2020, a process for which power stations at Hazelwood, Yallourn and HRL's Energy Brix are engaged.
"This condition is a major concern for this project, and it is unclear what it means for the future of Victoria's Latrobe Valley," Mr Welfare said.
"There is considerable uncertainty as to the date on which construction of the project could commence, if at all if there are no contracts for closure."
However Latrobe City mayor Ed Vermeulen said HRL's intentions "as far as he could see" had not changed.
"I'm taking an optimistic view, saying there will be not very much of a project delay at all, but of course Latrobe City are not privy to what's going on in conversations between the generators and governments, so we can't anticipate how long it's going to take," Cr Vermeulen said.
Environment Victoria campaign director Mark Wakeman repeated calls for the Federal Government to withdraw a $100 million grant attached to the project, a deadline for which project milestones expires on 30 June.
"It is unclear what game HRL are playing here, but freezing your project 10 weeks before your funding deadline is not a great way to attract (private) finance," Mr Wakeman said.
"If they do still intend to build a power station, it's a very strange game to play; in the eyes of financial investors, the community and government supporting the project, the announcement makes it look less likely that project (will go) ahead."
Victorian Premier Ted Baillieu told a press gathering on Monday HRL's decision was "disappointing" and the State Government was pursuing discussions with HRL.