Auditors for an Indian-owned company at the centre of a deepening energy crisis in Western Australia gave the firm the worst possible assessment when signing off on its financial accounts.

The revelation comes as shipments of coal begin arriving in WA to supply the state-owned power provider and one of the country's biggest miners left short of stock by dysfunction in the local coal industry.

An obscure venture called Oceania Resources was thrust into the headlines this week when it emerged the company was the most senior lender to a failed WA coal mine that owes almost $1.5 billion.

Being the senior creditor puts a company at the head of the queue to be repaid in the event an asset – in this case Griffin – is sold.

Oceania, a subsidiary of heavily indebted Indian conglomerate Sindhu Trade Links, lent $US60 million ($AU90 million) to Griffin Coal in 2015.

It has also collected multimillion-dollar fees every year to act as a manager for the mine.

But in a twist described as "mixed-up and murky" under parliamentary privilege by State Liberal MP Steve Thomas, Oceania borrowed the $US60 million from Griffin's biggest lender, ICICI.

The bank is India's biggest privately-owned financial institution and is owed more than $1 billion by Griffin, which is based in WA's historic coal production hub at Collie, 180km south of Perth.

Auditor raises the red flag

In the most recently lodged financial statements for Oceania, dated 31 March 2020, the company's auditor, Perth-based practice BDO, gave what's known as a disclaimed opinion on the state of the books.

According to the Australian Government's Auditing and Assurance Standards Board, a disclaimed opinion is the lowest possible mark an auditor can give to a firm's financial accounts.

The board notes that such an opinion carries the conclusion "the financial report is not materially correct, or that the auditor cannot conclude due to inability to gather sufficient appropriate audit evidence or multiple uncertainties".

BDO noted in its independent report that it had been "unable to obtain sufficient appropriate audit evidence".

Consequently, BDO said it could not "confirm or verify" whether Oceania would be able to recover the money it had lent Griffin.

The auditor also noted that the $US60 million loan with Griffin accounted for more than 90 per cent of Oceania's total assets.

Concerns about the financial strength of Oceania have been somewhat echoed by analysts assessing the predicament of its parent company, Sindhu.

In December 2020, a subsidiary of global ratings giant Fitch downgraded Sindhu's credit rating to IND B+, relegating the company's debt to junk status.

Anything below BBB- is considered sub-investment grade by lenders or banks because of the higher probability of such borrowers going broke and being unable to repay their loans.

WA grid teetering on edge

Griffin's fall into receivership in September has sparked fears for the security of WA's biggest power system, which services more than one million users in the southern half of the state.

Through its biggest customer, the Bluewaters coal-fired power station, Griffin indirectly supplies about 15 per cent of the power typically used in the grid.

It also supplies ASX-listed miner South32, whose Worsley alumina refinery, a big regional employer, depends on the coal.

But amid problems at rival miner Premier Coal, which supplies state-owned power provider Synergy, WA has been forced to import coal from abroad.

A spokeswoman for Southern Ports confirmed a vessel carrying 28,000 tonnes of coal from Indonesia arrived in Bunbury, south of Perth, this week.

Another ship carrying supplies from New South Wales is also believed to have arrived.

Dr Thomas, who represents the South West region in State Parliament's Upper House, said he was deeply concerned for WA's coal industry, the town of Collie and the local electricity system.

He suggested Oceania and its parent, Sindhu Trade Links, had little ability to restore Griffin to life and were "dodgy".

"This is a company with a dodgy historical record," Dr Thomas told parliament.

"I think that none of these companies could be considered to be in a capacity to do anything to help or assist the Griffin Coal Mining Company.

Oceania 'working' on fixes

Oceania said through a spokesman this week the company wanted to fix the problems at Griffin.

"Oceania Resources, as both a lender and operator of the Griffin Coal mine, has worked with and supported the Griffin coal mine since 2015, and continues to do so," the spokesman said.

"As a key stakeholder in the mine, Oceania likewise encourages all stakeholders to work together positively and pragmatically to quickly and efficiently resolve a way forward which ensures the sustained viability of the mine well into the future and for the benefit of the State and the people of Collie."