Callide C administrators “failed to discharge their duties”, court hears

Investors in Queensland’s Callide C power station will soon learn if a special administrator will conduct a fresh investigation of the explosion which crippled the state’s grid in 2021.

Callide C Power Station. Picture: Orin Lucke

Private investors in Queensland’s Callide C power station could learn as early as Monday if a special administrator will be appointed to conduct a fresh investigation of an explosion which crippled the state’s power grid in 2021.

It remains unclear why the C4 turbine at Callide C exploded in May 2021, which immediately stripped 10 per cent of Queensland’s generating capacity out of the east coast grid and forced an evacuation of the coal-fired plant.

A second, unexplained catastrophe took place in October 2022 when part of the cooling towers collapsed.

The generator was due to return to partial service on January 24, but on current estimates will not be able to deliver its full 990MW capacity into the grid until July 2024.

An expert review of the explosion was commissioned by Queensland government’s CS Energy and conducted by forensic engineer Sean Brady, while Deloitte were appointed as administrators in March.

But Dr Brady is still to deliver the report and private Czech energy investors Sev.en told the Federal Court on Tuesday they remain in the dark about the causes of the debacle, asking it to appoint special purpose administrators to investigate the cause or causes of the two incidents at the Callide C power station.

Barrister for Sev.en Christopher Withers SC told the court on Tuesday there was an “abject failure of administrators to discharge their duties” in the matter.

“Administrators say it is too hard and too late. That’s the vice of (their) submission. They don’t accept responsibility. Having been appointed last march … they were able to investigate but didn’t,” he said.

Mr Withers said his clients have proposed a special administrator, which they have agreed to fund, and want to resolve the issue as “expeditiously as possible”.

Callide C was operated and half-owned by the Queensland government’s CS Energy, and half by the privately held Genuity Group — which in turn is 25 per cent-owned by Czech energy investor Sev.en, with China Huaneng Group and Guangdong Energy Group controlling the rest.

Court documents seen by The Australian show Sev.en are asking the court to appoint John Park and Benjamin Campbell of FTI Consulting as special purpose administrators to Genuity subsidiary IG Power Callide (IGPC), giving them the power to “conduct investigations into the cause or causes of the two catastrophic incidents at the Callide C power station”.

Mr Withers said the administrators are not entitled to consider Mr Brady’s report, but “they are waiting for it”.

Also, Mr Withers said the administrators have “no material to enable them to express a view” on the cause of the incident to creditors at a meeting due by March and there is “no way to express a view about whether there are claims against” CS Energy.

“We say the investigation is not that difficult,” he said.

But, barrister for IG Power Callide Kanaga Dharmananda SC told the court the administrators “took a strategy not to duplicate pre-existing investigations and not to spend the creditor’s money doing so”.

“There hasn’t been attention given to interaction of administrators and special purpose administrators. The two regimes are not going to flow and sit well together,” he said.

Later, Mr Dharmananda said the “timing issue looms large”.

“In our submission the practical issues involved (with) the timing with respect to what the work of the administrators are doing presently … the inevitable consequences on the administrators. All point to this application being dismissed,” he said.

Justice Roger Derrington thanked the parties at the end of the two-day hearing, saying the matter had “been brought on urgently”.

“I will reserve the matter (and) try to give judgement on Monday if not earlier,” he said.

A spokesman for Deloitte declined to comment while the matter is before the court.