Federal Court authorises special investigation into catastrophic explosion at Callide C station
The Federal Court has authorised a special investigation into the catastrophic explosion at Callide C power station in 2021.
A Federal Court judge has slammed more than two years of futile efforts to investigate catastrophic failures at Queensland’s Callide C power station that have kept it off the east coast grid, after backing Czech coal tycoon Pavel Tykac’s bid for a fresh probe into the disaster.
On Monday, Justice Roger Derrington backed an application by Mr Tykac’s Sev.en Global Investments seeking the appointment of FTI Consulting’s John Park and Benjamin Campbell as special purpose administrators to collapsed company IG Power Callide (IGPC), with the powers to investigate the twin disasters that have kept Callide C out of the grid for almost three years.
The ruling authorises a new investigation into the extraordinary explosion of the C4 turbine at Callide C in May 2021, which stripped 10 per cent of Queensland’s generating capacity out of the east coast grid, helping push power prices to crisis point on several occasions since the first incident. Part of the power station’s cooling towers collapsed in October 2022.
No public explanation has yet been given for the extraordinary incidents at Callide C almost three years ago, and the matter has snowballed into a significant political issue ahead of Queensland’s state election later this year.
Sev.en was one of the private investors in Callide C, which was operated by Queensland government-owned CS Energy. The vehicle through which it held its stake was put into administration in March 2023, after a dispute between its owners — including Seven, China Huaneng Group and Guangdong Energy Group — over funding for the estimated $390m cost of returning Callide C to service.
But, more than two and a half years on from the explosion at the coal-fired plant, an expert review of the debacle — commissioned by CS Energy, and being conducted by forensic engineer Sean Brady — has still not been delivered, and Sev.en took to the court to demand answers, arguing administrators Deloitte failed in their duty to investigate the failures at Callide C.
In his reasons, Justice Derrington said the current administrators “have not undertaken any appropriate investigations” to determine the cause of failures in units C3 and C4.
“Whatever steps might be said to have been taken by the administrators to ascertain the causes of the failures of units C3 and C4, they have been inadequate,” he said.
“The administrators have failed to initiate investigations that they would be able to control, regulate and rely upon.
“Instead, they have conditioned their ability to understand the causes of the failures and the responsibility for them on the work of others.”
He also singled out the investigation by Dr Brady, saying it was “unclear” if he has finalised his report or if investigations remain ongoing.
“The fact that the administrators were not in a position to give any clear evidence about that matter suggests that they have no real control over its production and no direct knowledge of how it might be produced, or what it might say,” he said.
“It is worthy of observation that the administrators appeared to place substantial weight on the report of Dr Brady — an expert who had been engaged by the entity most likely to carry responsibility for the damage to units C3 and C4.”
A spokesman for Deloitte said they will assist the special purpose administrators “where they can”.
“The Administrators remain fully focused on their responsibilities, and expect to deliver their second report to creditors in late February. Creditors will then be able to vote on a future pathway for the operation of Callide C,” he said.
The case was aimed at preparing the way for a damages claim against CS Energy and the Queensland government, given CS Energy has the right to take full control of Callide at the lesser of either its fair value or book value — as set by independent valuers and auditors — according to documents filed by Deloitte to the corporate regulator.
Sev.en argued in court that Deloitte’s failure to pursue its own investigation into the explosion, and open the possibility of a legal claim against CS Energy, was an “abject failure of administrators to discharge their duties”.
