A $50 million state grant for a new coal-fuelled power plant in the Latrobe Valley has been quietly axed, with the Napthine government saving $34 million.
Coal technology company HRL had proposed a new 600-megawatt power plant using gasification technology it says lowers the greenhouse gas emissions from using brown coal.
But the project has been in limbo for years after it failed to attract financing and suffered a Victorian Civil and Administrative Tribunal ruling that it could not go ahead until the equivalent amount of electricity generation was retired in the Latrobe Valley.
A separate $100 million Commonwealth grant to the same project was cancelled well over a year ago because of HRL's failure to meet milestones.
The end to HRL's grants comes as the state and federal governments are expected to imminently award $90 million in promised new grants to projects in the Latrobe Valley to develop and deploy technologies that reduce the emissions intensity of brown coal.
The state government grant to HRL was originally awarded by the former Labor government in 2006. By August 2010 it is understood $20 million of the grant had been given to HRL, with $30 million held back until more project conditions were met.
It is understood significant negotiations between the government and HRL have taken place about how much of the $20 million should be returned.
Victorian Energy Minister Nick Kotsiras confirmed an agreement had been reached, but refused to specify the amount that had been recovered.
HRL, through its subsidiary Dual Gas, has posted a final statement on the grant agreement on its website, but omitted the final amount it received.
But HRL's latest annual report registered with the Australian Securities and Investments Commission says the company received just short of $16 million from the state government grant.
Environment Victoria campaigns director Mark Wakeham said: ‘‘Even with $150 million of taxpayers money and an allocation of 1 billion tonnes of coal in 2002, HRL couldn’t make the economics of their polluting project stack up.
‘‘It’s time to stop throwing good taxpayers money after bad, decide against a coal allocation and give up on the pipe dream of new mines or coal-fired power stations in the Latrobe Valley.’’