The operator of the Bass Strait interconnector, Basslink, has entered voluntary administration.
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Keppel Infrastructure Trust announced on Friday its subsidiary had reached the decision after a failed sale process and ongoing disputes with the Tasmanian Government and Hydro Tasmania.
Basslink group is made up of Coral Holdings Australia, Nexus Australia Management, Nexus Investments Australia, Basslink Australia GP, Basslink Pty Ltd, and Basslink Telecoms.
The companies have appointed Ernst and Young as voluntary administrators and KPMG has been appointed as receivers by their lenders.
Peter Gothard from KMPG said Basslink's business would continue to operate as usual.
Basslink chief executive Malcolm Eccles said the announcement would not impact the operations of the energy connector between Tasmania and Victoria, however.
Mr Eccles said the decision was made in the long-term interests of Basslink, its creditors and its employees.
"It follows ongoing disputes with its customer Hydro Tasmania and an unsuccessful sale process with APA," he said.
"Basslink has operated in a highly challenging environment for some time."
APA Group backed out of a proposed takeover of the interconnector last month.
Around the same time, the Tasmanian Government and Hydro Tasmania wrote to the owners of Basslink to advise them that it would pursue their legal rights to obtain award payments owed due to the interconnector's prolonged failure in 2016.
Mr Eccles said Basslink had worked in good faith to progress the implementation of the arbitration awards and to progress the matters under the standstill agreement.
He said this included engaging with the state government and Hydro Tasmania with several proposals, including a repayment plan.
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"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," Mr Eccles said.
Premier Peter Gutwein said the announcement was not unexpected and the state's energy security was not at risk.
He said the management structure around the energy interconnector would not affect operation of the cable.
Tasmanian Gas Pipeline in a statement said Keppel's announcement on Basslink raised doubts about the state's energy security which it said had been threatened by Hydro's decision to mothball the Tamar Valley Power Station.
"Last time Basslink failed in 2016, the Tamar Valley combined cycle gas turbine was vital to maintaining power supply, rescuing Tasmania's electricity system and keeping the lights on in the state," it said.
"Yet under the contracted volumes requested by the Hydro, this key generator will be mothballed and unavailable."
Labor's energy spokesman Dean Winter said the state's energy security had not been under such a cloud since 2016.
"Tasmanian consumers and business need confidence in Tasmania's energy security infrastructure," he said.
"Today's announcement just shows how poorly energy security has been managed throughout this government's time in office."
Hydro Tasmania in a statement said under contract there was a framework which enabled the interconnector to continue to operate.
It said Hydro Tasmania's energy storage was at 52.6 per cent which was well above the high reliability level.
Political reporter for Australian Community Media, based in Hobart.
Political reporter for Australian Community Media, based in Hobart.
