A BIOFUELS company with Labor Party links was awarded a lucrative grant by the Palaszczuk Government ahead of dozens of other contenders.

The Courier-Mail revealed a company awarded a taxpayer-funded grant to turn Bundaberg distillery waste into energy is chaired by former federal MP Bernie Ripoll.

The company, Utilitas, is the brainchild of Mr Ripoll's partner Fiona Waterhouse, who is chief executive and major shareholder in the Brisbane-based business.

There is no suggestion the contract was not awarded on merit.

Premier Annastacia Palaszczuk personally announced the commercial-in-confidence grant last week while in Bundaberg, a key electorate that Labor must retain to regain government at the election.

The grant was awarded under the Government's $4 million Biofutures Acceleration Program which generated interest from more than 100 companies and was set up to attract firms to Queensland.

Mr Ripoll is a former federal Labor member for Oxley, a seat that overlaps Ms Palaszczuk's Inala state electorate.

He is also a member of Labor's Right faction, along with Ms Palaszczuk and State Development Minister Anthony Lynham, whose department made the grant decision.

"It just so happens I am in the Labor Party and as far as I know that isn't an offence,” Mr Ripoll said.

He said he did not meet or talk to anyone in the Government about Utilitas or the grant.

"I did not speak to the Premier,” he said.

"They did not know I was coming to Bundaberg. I have been very careful not to give the appearance of the relations and links.”

Dr Lynham's spokeswoman said the Minister was introduced to Ms Waterhouse on the day the grant was announced, while he met Mr Ripoll at a social event.

She said the Minister had no role in the assessment of applications for funding for the program.

Opposition Leader Tim Nicholls said "fundamental questions” had been raised about Ms Palaszczuk's "leadership and integrity”.