New power station earmarked for Queensland

Global investment and advisory firm Babcock & Brown Ltd today said it would go ahead with the development of a new power station in Queensland.

The company said it had achieved financial close for the A$340 million ($367.72 million) Braemar Power Project in south east Queensland to be developed in partnership with ERM Power.

Babcock & Brown has arranged A$182 million of senior funding from ANZ Investment Bank, Calyon and Suncorp, for the project.

It has also arranged A$48 million of mezzanine funding facilities.

Babcock & Brown will invest up to 60 per cent of the equity

Other major equity investors are the Babcock & Brown Direct Investment Fund and ERM Power.

"Queensland is Australia's fastest growing electricity market and the Braemar project should ensure there is sufficient capacity to meet demand throughout peak months," Babcock & Brown head of Australian and New Zealand energy business Warren Murphy said.

"Initially, it will provide 450 megawatts (Mw) for the summer season of 2006/07, with scope to grow capacity in future years."

The Braemar project will be supported by a 10 year contract with Energex Retail Pty Ltd, Queensland's largest electricity retailer.

Meanwhile, oil company Santos today said it had secured a 10-year contract to supply up to 45 petajoules of gas to the project.

"This contract significantly increases the volumes of Santos gas being used in power generation in southeast Queensland," Santos managing director John Ellice-Flint said.

"The growth in new gas-fired power projects in eastern Australia, such as Braemar, will continue to significantly increase demand for gas over the next decade, and Santos is well placed to further participate in this growth opportunity."

The new contract means Santos will be supplying gas to three of Queensland's largest gas-fired gas power stations -- Braemar, Swanbank E near Ipswich and Mica Creek at Mount Isa.

Gas supplies for the Braemar contract will be sourced from Santos eastern Queensland gas fields, with first supplies commencing in 2006.

- AAP