The Northern Territory government has admitted that the timelines for its controversial planned Middle Arm gas and industrial precinct on Darwin Harbour have slipped considerably.

The ABC can reveal that the project, which the NT government planned to have under construction by 2026, and finished by 2029, could potentially be delayed by at least two years.

Initially branded by the NT government as a “sustainable development precinct”, the project has faced scrutiny from environmental groups and health experts over concerns it would worsen pollution and expand the fossil fuel industry. 

It would host gas production using fracked gas from the Beetaloo Basin, as well as facilities for carbon capture and storage, minerals processing and hydrogen production.

The federal government’s promised $1.5 billion contribution towards the project must be approved by its Infrastructure Australia body to go ahead.

Responding to a Freedom of Information (FOI) request by the Environment Centre NT, Infrastructure Australia has revealed that it has knocked back the business case put forward by the NT government and required further work to be done on it.

“The business case for the Middle Arm precinct … was considered, but not accepted for evaluation by Infrastructure Australia on 27 February 2024,” the body said.

“The proponent, [the] NT government, is still developing the business case.”

Environment Centre NT director Kirsty Howey said: “We’ve seen delay after delay for this project and it shows that it’s really a non-starter and a mess”.

“It’s time to dump this project on health, climate and environment grounds.”

NT Infrastructure Minister Bill Yan has blamed the federal government for the delays to Middle Arm.

“From our department’s perspective dealing with the federal government, there’s been an eight-to-twelve month delay in getting a response back,” he said.

Assessments of the environmental impacts of Middle Arm will also be crucial to whether the project can gain final approval from both NT and federal regulators, with anglers, doctors and traditional owners particularly worried.

The NT Environment Protection Authority (NT EPA) has recently extended its deadline for the NT government to submit an environment impact statement proposal by two years, from October 2024 to October 2026, to give it more time to draw up.

The federal environment department is carrying out a separate strategic assessment.

“We’ve had some delays dealing with the federal government on the environmental assessments and sadly that’s taken longer than what it should have,” Mr Yan said.

In a statement, a spokesperson from the federal climate change department said the timing of the environmental impact statement was “a matter for the NT government”.

Given the project delays, green groups are calling for the federal funds to be re-allocated.

“We think the $1.5 billion should be spent in the Northern Territory, but instead of being spent on a gas and petrochemical expansion, it should be spent to speed [up] the transition to renewables,” Ms Howey said.

“We’ve put forward a plan to spend the $1.5 billion on renewables projects like a huge battery to stabilise the grid and retrofits in remote communities.”

In a statement, federal Infrastructure Minister Catherine King said: “Questions about the project’s time frames are best directed to the NT government”.

She said her government remained committed to providing the $1.5 billion to the Middle Arm development, which should include a range of industries.

“The Albanese government remains committed to the $1.5 billion planned equity investment to support the development of common user infrastructure at the Middle Arm Sustainable Development Precinct,” she said.

“The NT government has issued a list of proponents which includes … a hydrogen producer.”