The purchase made from Hydro Tasmania was an important step in the development of the 200MW gas-fired combined cycle Tamar Valley Power Station and an associated 180MW back-up and peaking plant, Alinta said.

Gas will be supplied to the Tamar facility from the offshore Gippsland Basin’s Manta-Gummy fields, under a deal signed last week with joint venture partners Beach Petroleum and Anzon Australia.

The initial contract will see 225 petajoules of gas supplied to the plant over 15 years starting in 2009.

The Bell Bay sale terms included an upfront payment of $30 million and an agreement to end the pipeline capacity agreement (PCA) from April 2009, about nine years early.

“For Alinta, it is an important acquisition which will facilitate the development of the combined-cycle Tamar Valley Power Station – Tasmania’s first private sector power station – and the associated 180MW back-up and peaking plant,” Alinta Energy executive general manager Jim Hennessy said.

“The 180MW back-up plant will now comprise the 105MW of gas turbines purchased from Hydro plus 75MW of new gas turbines, saving Alinta significant capital expenditure.”

Hennessy said the Bell Bay site also provided Alinta with significant advantages for future development of gas-fired generation.

“The site has all the features required for modern and efficient gas-fired generation, being adjacent to both the Tasmanian gas pipeline and high voltage electricity transmission lines, and has access to cooling water,” he said.

Alinta is seeking approvals to build the 203MW Tamar facility on industrial land near George Town.

Construction is due to begin later this year, with first electricity expected by the first quarter of 2009.