APA Group seals $773m Basslink power cable deal linking Victoria and Tasmania

Gas pipeline operator APA Group is set to buy the undersea electricity cable connecting Victoria and Tasmania for $773m as it boosts its east coast exposure.

Gas pipeline operator APA Group is set to buy the undersea electricity cable connecting Victoria and Tasmania for $773m as it boosts its east coast exposure.

The Singaporean owner of the 370km Basslink cable – Keppel Infrastructure Trust – put the business under in November 2021 rather than pay the $105m the state and Hydro Tasmania claim to be owed over the 2015 failure of the power and internet connection with the mainland.

APA then bought Basslink’s bank debt and in September was named preferred bidder in the competition after competing with a consortium headed by Merrick Howes, a former executive at Anchorage Capital Group, through his Aviron Capital group.

“APA confirms it has entered into documentation to potentially acquire Basslink and agreed documentation with Hydro Tasmania and the state of Tasmania in relation to the ongoing operations of Basslink,” the company said in a statement on Monday.

Basslink is the only physical connector for power and internet services to Tasmania and, in addition to smoothing Tasmania’s own power grid, plays a role in stabilising the National Energy Market when power demand fluctuates in the summer months.

Most of its cash flow is generated from a 25-year term agreement with Hydro Tasmania. It is designed to protect Tasmania against the risk of drought-constrained energy shortages.

Basslink also faces the prospect of competition from a second interconnector, with TasNetworks still considering construction of a 1500 megawatt subsea line crossing the Bass Strait. APA rose 0.5 per cent or 5c to $9.55.

Separately, South Australian oil and gas producer Cooper Energy announced its long-serving chief executive, David Maxwell, would step down next year after more than 11 years in the top job.

The board has retained search firm Russell Reynolds to find Mr Maxwell’s successor with the CEO to leave once a replacement has been found next year.

The energy veteran has repeatedly warned governments not to meddle in gas pricing to support manufacturers as his company prepares to deliver new east coast supplies into long-term contracts, saying discovery of new fields could be put at risk by interference in the market.

Cooper bought the Orbost gas plant from APA in June for between $270m to $330m, with the payment dependent on its performance. The plant has been plagued by start-up issues that meant the facility was producing at rates a third below its target of 68 terajoules a day and is now averaging 55TJs a day following upgrade works in March and April.