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Premier rules out Griffin aid
Premier rules out Griffin aid

Premier Colin Barnett has ruled out increasing WA’s electricity prices to help Collie’s embattled Griffin Coal mine and ease the sale of the Bluewaters power stations.

Mr Barnett said State-owned utilities should not have to pay more for lectricity from the power stations if Bluewaters had to pay more for coal from Griffin.

The South Western Times understands Griffin Coal is losing about $6 million a month because it is selling coal to Bluewaters for about $40 a tonne while the cost of extraction can be up to $70 a tonne.

Indian company Lanco Infratech bought the debt-laden Griffin Coal from administrators in 2010 following the company’s collapse.

Lanco has since been pushing for higher coal prices and, as leverage, refused to produce a legal guarantee it will continue supplies to Bluewaters.

Coal supply and price concerns have delayed the $1.2 billion sale of Bluewaters, which went into administration in 2010 alongside Griffin Coal, to Japanese buyers.

Bluewaters’ administrator KordaMentha has asked Synergy and the Water Corporation to pay more for power to enable the power stations to, in turn, pay more for coal from Griffin.

Mr Barnett said the State’s position was that any coal price increase agreement would need to be dealt with under the existing acceptable contractual agreements between Bluewaters and its electricity customers.

‘‘It is not up to the State or electricity consumers to prop up commercial decisions made by a private sector company in this instance,’’ Mr Barnett said.

The Griffin and Bluewaters coal supply agreement was signed when WA businessman Ric Stowe owned both sites.

Collie-Preston MLA Mick Murray said the agreement was ‘‘outdated’’ and it was crucial the State Government found a solution where Griffin’s finances broke even.

‘‘If Collie’s coal companies fail, WA will have to turn to gas for electricity which would be double the cost,’’ he said.

Mr Murray said the coal mine was ‘‘not asking for a hand out’’ but a competitive price for its product.

He said it was unfair for the State Government to expect Griffin to continue to absorb such big financial losses.

Mr Barnett said the Government was concerned about Griffin’s financial troubles.

‘‘However, it must be pointed out that Griffin Coal’s coal supply agreement with Bluewaters power station was known by Lanco prior to the purchase of Griffin Coal in 2010,’’ he said.

Lanco declined to comment.