The state and federal governments could be on the verge of making a series of “reckless” multi-million dollar payments to new coal companies in financial trouble, an environment group has warned.
A new research report released today by Environment Victoria has highlighted numerous companies, believed to be short listed for brown coal-related government grant money, which have inflicted major financial losses in recent years.
Featuring among nine new coal technology companies profiled in the ‘Victoria’s Coal Wannabes’ report, Ignite Energy was stated having incurred a loss of $6 million in the 2012 calendar year.
The report goes on to highlight an external audit detailing the company’s liabilities exceeded current assets by $2,229,716.
Ignite Energy is moving to establish numerous new coal projects in the Valley, including a coal to liquid fuel, chemical coal drying and a coal to fertiliser project.
Ignite is widely believed to have been short listed to receive millions in the joint government $90 million Advanced Lignite Demonstration Program, designed to help companies establish technology demonstration plants to allow them to prove their commercial viability.
“This research finds that most of the companies lining up for cash and coal handouts have never built a commercial project and have very little capital behind them. If the cash grants go ahead Victorian taxpayers will be bankrolling the coal pipe-dreams of a handful of speculators,” Environment Victoria campaigns director Mark Wakeham said.
The report has also taken aim at Newtech Energy, Exergen, Mantle Mining, Environmental Clean Technologies, Latrobe Fertilisers, Coal Energy Australia, and Shanghai Electric Australia Power and Energy Development.
“Given the tenuous financial status of these companies the most likely outcome of any cash or coal handout is that the promised projects never proceed and a few coal executives profit at the taxpayers expense,” Mr Wakeham said.
However Ignite Energy executive director John White said it was common place for companies pioneering new technologies to be sitting in precarious financial positions.
“We are not an operating company making a profit – we are an investment company that gets its support from shareholders who invest their private equity into the development of new technologies,” Mr White said.
“The money then gets spent in developing technology and scaling it up to a commercial scale – when we’ve spent it in a timely and responsible fashion, we then go out to raise more funds through the research and development process.”
Despite supplying a detailed list of questions to state and federal energy and resource ministers, spokespersons said it was inappropriate to comment as the ALDP program was still in its evaluation phase.
A spokesperson for Federal Energy and Resources Minister Ian McFarlane said ALDP submissions were scrutinised by independent technical and commercial advisers.
Attempts to contact other companies detailed in the report were unsuccessful before going to print.
