Approval was reserved until all major agreements including stand-by arrangements with Western Power, gas supply from Santos and Apache, operations and maintenance and the contract to supply and install the co-generation unit with Mitsubishi/Downer's joint venture had been finalised.

The gas supply contract has been awarded to the Apache/Santos East Spar Joint Venture for up to 90pj of gas from the East Spar Gas Field in the Carnarvon Basin to the plant in Pinjarra.

The full contract daily volume when the plant is commissioned will be 23tj per day while the East Spar field already delivers round 125tj per day for sale to various customers in and around Perth and in the Western Australian Goldfields.

Despite the signing of the supply contracts Epic has questioned the claims that all agreements have been signed sealed and delivered. The company said that arrangements for the delivery of the gas from Pinjarra to the refinery and the provision for associated infrastructure were still to be finalised.

However, Alinta told the West Australian that the project was ready to proceed with or without Epic and that contingency plans have already been put in place in case an agreement could not be reached.

The $100 million project is the start of Alinta's expansion into the local electricity market with a further ten units planned to be rolled out to match growth in the WA electricity market. The company expects to require an additional unit every 18 months with electricity production scheduled from the second quarter of 2005.

Alinta's chief executive Bob Browning also confirmed that sufficient foundation customers had been secured to underpin the first unit with over 110MW of electricity pre-sold.

"The level of demand has been encouraging and demonstrates consumers' desire for cheaper and cleaner electricity," Browning said.

While Alinta has sufficient cash reserves for the initial stages of the project, finance for the remainder of the project is currently being finalised with a syndicate of three banks.

Construction of the 140MW co-generation unit is to begin in the last quarter of 2003, with electricity produced for sale commencing from July 2005.

Once the unit is commissioned, Alcoa will use all of the steam output in its Pinjarra refinery and Alinta will sell the electricity direct to contestable customers.