Australian sugar milling company Mackay Sugar has awarded a A$14m ($15m) contract to G&S Engineering for part of the construction of a cogeneration plant in northern Queensland.

By the end of next year, the A$120m plant will use sugarcane waste to produce a third of the electricity needs of the town of Mackay, which has a population of 85,000.

“As part of their work G&S Engineering will install a high pressure boiler capable of powering a 37.25 MW turbine and producing renewable energy for the Mackay city electricity network,” said Mackay Sugar CEO Quinton Hildebrand.

Mackay Sugar has already locked in a six-year contract with Ergon Energy for the electricity the plant produces. The plant is set to be completed by June next year for commissioning towards the end of 2012.

G&S Engineering chief executive Mick Crowe described the project as an exciting initiative for Queensland.

“A lot of the environmentally clean projects you see they’re either heavily subsidised or they have negative outcomes in some other sense,” he said.

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