Basslink enters voluntary administration

·2-min read

The owner of the undersea power cable across Bass Strait has entered voluntary administration amid a legal dispute with Tasmania over an outage six years ago.

The Tasmanian government in October indicated it was taking legal action against Basslink over $70 million owed by the company because of a months-long outage that began in late 2015.

Basslink on Friday announced companies in the Basslink group had entered voluntary administration.

Chief executive Malcolm Eccles said the decision was made because of an ongoing dispute with state-government-owned Hydro Tasmania and an unsuccessful sale process with APA Group.

"Basslink has operated in a highly challenging environment for some time," Mr Eccles said in a statement.

"Regrettably, against the backdrop of many issues and having exhausted options, Basslink needed to take proactive action to put Basslink in the best possible position to navigate forward through these challenges."

The $875 million cable, which was commissioned in 2005, connects Tasmania to the national energy grid and allows power to be imported and exported.

Tasmanian Premier Peter Gutwein told reporters the state's energy security was not at risk.

"(Voluntary administration is) something we would not like to have seen occur but it's not unexpected. The infrastructure is in place, it's working, and will continue to do so," he said.

Hydro Tasmania says it has energy storage levels of 52.6 per cent, a "very secure position", and there is a "framework" to enable the interconnector to continue operating.

Administrators will undertake a preliminary review and assessment of Basslink's operations.

Tasmanian Energy Minister Guy Barnett last month said Basslink had yet to pay more than $70 million to the state government and Hydro Tasmania as required by an arbitrator.

The state government decided not to extend a standstill agreement with the company, entered into following arbitration.

Mr Barnett said Basslink had not adequately progressed commercial and engineering requirements and had also failed to secure refinancing.

At the time of the outage, Tasmania had received record low rainfall, putting a strain on hydroelectricity generation and forcing the government to import temporary generators.

The arbitrator last year ordered Basslink to pay more than $40 million to the Tasmanian government and Hydro Tasmania.

Mr Eccles said the decision to appoint administrators was made with in long-term interests of Basslink, its creditors and employees in mind.

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