Computer blue ongoing

SIX months after final State Cabinet approval was expected, the future of the Pinnacle Blue supercomputer project is no closer to being announced.

In December last year, the Government declared its in-principle support for the development of a two-teraflop supercomputer facility in WA. Such a computer would perform two trillion calculations per second.

The project was being led by Pinnacle Blue Ltd, wholly owned by YZEPT Pty Ltd – in a consortium with other companies including IBM – run from the West Perth office of Alliance Energy. Alliance’s managing director and major shareholder, Peter Andrews, is also chairman of Pinnacle Blue.

In announcing the Government’s interest, Premier Geoff Gallop said after due diligence was completed on the project it would consider offering a no-interest $30 million loan to support the $170 million proposal.

Such a loan would require State Cabinet’s approval, but although this was expected to be given in February, it has not been forthcoming.

The suggestion of a government loan is of concern to local technology industry representatives. The question they raise is not whether government should be involved in an essentially private venture, but whether it would be more appropriate for the State Government to use the SPIRIT (Strategic Partnering in Resourcing Information Technology) competitive tendering process.

The chairman of the Australian Information Industry Association in WA, Phil Foxwell, said the AIIA neither supported nor denounced the Pinnacle Blue project. He agreed it could be beneficial across the industrial and educational sectors.

But he said it appeared the Government was prepared to offer a $30 million loan without the usual business-case scrutiny that such a project would require. He also questioned whether the motives of the parties involved were completely innocent.

“It has a risk of becoming commercial. The motives might be altruistic now, but 18 months later someone’s going to want to put commercial concerns on it, and there’s no guarantee it will not become a commercial enterprise,” Mr Foxwell said.

A spokesman for Premier Geoff Gallop told WA Business News that cabinet was still yet to formally approve the Government’s involvement, and nothing had changed since Dr Gallop spoke on the issue in Parliament in December. At that time, Dr Gallop said the government wanted “some outstanding issues” to be resolved to ensure the State could maximise the project’s potential.

The spokesman said discussions were still under way about the exact terms and conditions of any agreement between the State and Pinnacle Blue Ltd, and added that no announcement on the project was pending.

When the Government’s interest was announced, the premier referred to an economic analysis prepared by Syme Marmion & Co, which, in part, estimated the super computer could create more than 1,200 jobs in WA. Dr Gallop said the facility would offer “a significant opportunity to boost the State’s infrastructure for research and innovation”.

But the optimistic assessment was tainted by later news that other companies’ analyses had arrived at less positive conclusions.

QPSX, a technology commercialisation company, is said to have expressed interest in participating in the project, but after conducting its own due diligence study chose to not become involved. Accounting firm Ernst & Young is also believed to have conducted due diligence on the Pinnacle Blue project but it, too, demurred when that work was completed.

Speaking to WA Business News Mr Andrews said the Pinnacle Blue project was “still in the Government’s system”. He said Pinnacle Blue Ltd was awaiting the Government’s delivery of a timeline for a project, but he did not wish to comment further on the project.

Mr Andrews did not want to discuss the continued involvement of Pinnacle Blue’s consortium partners, saying the company had not yet disclosed who its partners were.