A company run by prominent Queensland Liberal National Party members was part of a consortium awarded $3 million under a federal infrastructure program, the ABC can reveal.

Key points: The money comes from the National Water Infrastructure Development Fund

The money comes from the National Water Infrastructure Development Fund The fund guidelines state that Barnaby Joyce is the final decision-maker on bids

The fund guidelines state that Barnaby Joyce is the final decision-maker on bids A company that is part of the consortium is headed by a member of Queensland's LNP state executive

The money is for a feasibility study for the proposed Urannah Dam in north Queensland.

The $3 million was secured by a consortium that was made up of the community group, Bowen Collinsville Enterprise Inc, and the Brisbane-based venture capital group, Initiative Capital.

Initiative Capital is owned by its chief executive John Cotter Jr and its executive director Gerard Paynter, who say the bid was made through an independent and transparent assessment process, with all funds to be managed by the state.

But the Queensland Government has told the ABC successful funding bids were selected by the Deputy Prime Minister Barnaby Joyce and that the Urannah Dam was not even listed as a state priority.

The $3 million for the Urannah Dam study came from National Water Infrastructure Development Fund. The fund called for applications late last year, with a panel of technical experts assessing the bids.

But the fund guidelines state "the Minister for Agriculture and Water Resources [Barnaby Joyce] will be the final decision-maker".

Company chief executive on LNP state executive

John Cotter Jr is a member of the powerful Queensland LNP state executive and a regional party chair.

LNP sources said he was heavily involved in fundraising at all levels of the party.

When asked by the ABC about fundraising and his roles with the LNP, Mr Cotter said he was not allowed to comment.

"I can only confirm I am [an LNP] member," he said.

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But a spokesman for the Queensland LNP confirmed Mr Cotter was on the state executive.

His partner in Initiative Capital, Gerard Paynter, is the Queensland managing director of LNP-aligned lobbying firm Barton Deakin.

Its website describes him as "an experienced Liberal National Party figure having been a Queensland and Federal Young Liberal president and a member of the Queensland state executive for five years".

It says he also has extensive experience in managing LNP state and federal campaigns, including holding a "central campaign role within the LNP for the 2013 federal election".

Mr Paynter told the ABC he did not hold any executive positions within the LNP.

Cotter, Paynter say there is 'nothing to hide'

Mr Cotter told the ABC there was nothing to hide, saying "an independent assessment process assessed each proposal".

"It is very clear that the Department of Energy and Water Supply (DEWS) is the state agency managing the funds under agreements with the Federal Government."

Mr Cotter said the consortium also had the support of the Indigenous traditional owners, with Mr Paynter adding Initiative Capital was approached by the local community to help bring the project together.

"We subsequently formed a consortium with the Urannah people and Bowen Collinsville Enterprise," he said.

"Our consortium prepared a proposal in line with the guidelines, which we lodged through the Queensland DEWS.

"As the overseer of water policy, DEWS asked that proposals come through them.

"They assessed the proposals and forwarded them to the Federal Government for further consideration."

The Queensland Government said it had no role in selecting the successful applicants for funding, saying it merely forwarded all applications it received.

"Deputy Prime Minister [Barnaby] Joyce's Federal Department of Agriculture and Water Resources is responsible for all [expressions of interest], and the Deputy Prime Minister is the final decision-maker for all successful projects," Queensland's Water Supply Minister Mark Bailey said.

"The selection of the Urannah Dam EOI is a matter for the Federal Government."

Consortium 'recommended' by Queensland Labor

But a spokesman for Mr Joyce has told the ABC the Urannah Dam bid had been submitted by the Queensland Government for federal funding approval.

"The consortium recommended for funding was proposed by the Labor State Government in Queensland," he said.

"Questions about the selection of the consortium should be referred to the Queensland Government."

But the Palaszczuk Government has dismissed this.

The ABC has obtained a letter from Queensland Water Supply Minister Mark Bailey to Mr Joyce in March revealing that the Urannah Dam was not on the State Government's priority list for funding by the Commonwealth.

In the letter, Mr Bailey told the Deputy Prime Minister he "would like to emphasise that whilst the Queensland Government will be forwarding all applications it receives this does not indicate any formal endorsement or support for particular projects".

Federal Labor's Agriculture spokesman Joel Fitzgibbon said he was concerned by the decision to select the consortium involving senior LNP figures.

"It does appear that this process lacks rigour, and therefore, leaves itself exposed to charges that there are jobs for the boys here," he said.

But Mr Cotter dismissed any suggestions of political favouritism, saying "the facts are the monies are being managed by the State of Queensland".

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