THE world's first commercial wood-fuelled power station is to go into liquidation with the loss of 32 jobs.

The £30 million Arbre plant, in Eggborough, near Selby, is a renewable energy power station, fuelled by willow coppice, and was intended to produce electricity for 33,000 households.

But staff at the plant have been told they are to be made redundant after funding was pulled by Kelda, the holding company of Yorkshire Water.

Twenty-eight members left the plant at 1.30pm yesterday. Four members of staff, including an accountant and cleaning staff will continue at Arbre until the end of the liquidation process.

Director of Arbre, Malcolm Chilton, said the company was upset at having to lay its staff off.

He said: "On July 2, Kelda, who were financially supporting the project, wrote to us and told us they were going to cease financial support.

"This left us with very little choice but to put the company in liquidation."

Arbre is owned by Energy Power Resources, who bought the plant from Kelda just over two months ago. Shareholders will be meeting to finalise the decision on Wednesday.

Mr Chilton said: "We have tried hard to find alternative sources of funding but failed. The reason we have laid staff off is that we didn't want staff working without being sure that we could pay them.

"It was a project we had high hopes for but it relied on Kelda funding it until it was fully commissioned."

A Kelda spokesman said: "We take the clear view that Kelda should focus on its core water business. Renewable energy should be developed by specialists in the field, not by a water company. It is disappointing that the project hasn't proved viable especially given the large sums of money invested in it."

Selby MP John Grogan said that he had organised an emergency meeting on Monday with the companies involved, representatives from the Department of Trade and Industry and the Selby Task Force to try and save the project.

He said: "If Arbre closes it will be another big blow to the Selby economy. It will also undermine an important new renewable energy technology."

Shocked staff from the plant issued a statement this morning.

It said that staff were "stunned and confused, and looking for answers about how their fortunes have declined so quickly."

One of those affected said: "I left a job at the pits to work at Arbre. I thought that the project represented the future for electricity generation - cleaner and greener. I thought I had found a good, secure job but now I am left with a poor redundancy package and wishing that I had never left the pit. I feel really badly let down."

Selby District Councillor for Eggborough John McCartney said: This is more devastating news for individual families. The project was opened by a government minister in a blaze of glory but the government didn't seem prepared to help save it."

Updated: 15:52 Friday, August 02, 2002