Sunday, April 24, 2011

Hydro-power plan trashed

ORIGIN Energy’s ambitious plans to build a multi-billion-dollar hydro-electric plant in Gulf province near Purari River and send the electricity back to Australia via an undersea cable failed to impress investors or analysts.By 1343AEST last Wednesday after investors digested the news, shares in Origin fell A$0.16, about 1%, to A$15.49 and had been as low as A$15.48.Last Wednesday after Origin announced the deal signing, State One Stockbroking energy analyst Peter Kopetz said the plans for the plant sounded “far fetched” and he doubted he would see it built in his lifetime.“It reminds me of the good old days of PNG supplying gas to Queensland which came up to nothing, and I think that is what is likely to happen to this as well,” Kopetz was quoted on Bloomberg online news.“This is nothing new, and there have long been talks of getting electricity from PNG.“Maybe the next thing will be getting water from PNG,” Kopetz said.Under the plan unveiled last Wednesday, a 50:50 joint venture between Origin and PNG Sustainable Development Program Ltd could build the plant on Purari River, waterway in the nation, providing it is supported by a feasibility study, due for completion in 2012.Power generated from the plant would be fed into the Australian east coast grid via Weipa in Queensland and also power villages in PNG.Origin said the hydro plant could generate 1,800MW of baseload electricity, and would be the first project to deliver year-round baseload renewable energy into mainland Australia.A resources analyst at Australian Stock Report, Stan Shamu, said investors were wary of the project given its likely high costs.“Investors are questioning whether the feasibility study will go well and the capital expenditure on the project,” Shamu said.“The market doesn’t like uncertainty, so if they don’t feel they don’t have enough information to make a decision, their initial reaction is to be cautious,” he said.Queensland premier Anna Bligh has said green power from the plant would help Townsville become the state’s next major industrial city and could also help further develop bauxite deposits at Weipa.