The future of the Bass Strait interconnector has been plunged into uncertainty, with industry experts unclear as to who would be willing to assume ownership of the beleaguered asset.
On Friday, Keppel Infrastructure Trust announced it had entered into voluntary administration, citing an unsuccessful sale process with APA and an ongoing dispute with the state government and Hydro Tasmania.
Following a failed arbitration between Keppel, the government and Hydro Tasmania, Australian electricity provider APA Group walked away from a deal to purchase the energy asset.
Independent energy analyst Marc White said following the finding of arbitrator Justice Robert French the sale of the asset to another private company was unlikely.
Mr White said if Keppel were unable to secure a new buyer, the most likely outcome was that the state government and Hydro Tasmania would make a bid and assume ownership of the interconnector.
However, Energy and Emissions Reduction Minister Guy Barnett said the government's primary objective was to have a financially stable and competent operator and did not intend to purchase the cable.
In December 2015, the interconnector stopped working for a six-month period, contributing to an energy crisis in Tasmania.
Mr White said the sale of the asset would be difficult following the findings from the arbitration that cast questions over the long-term viability of the cable.
"During arbitration, Justice Robert French made the comment that it was likely the use of the cable had led to thermal stress, which had likely contributed to 2015 failure and given the judge, that's quite a damning finding," he said.
"That sort of puts a technical question on the cable and it's a very hard thing to hand that information to some economic and financial people to figure out what the market value is, when you're not sure what the technical capability or in life expectancy is.
Mr White said the decision for APA to walk away from the purchase also raised questions about the viability of the asset.
"The fact that APA had a look at the asset and no doubt done their due diligence and chosen to walk away may raise some issues about the ability for the technical assessment of the condition of the cable," he said.
At Friday's announcement Basslink chief executive Malcolm Eccles did not discuss the state of the cable, but said the decision to enter into administration would not impact the operations of the energy connector between Tasmania and Victoria.
Independent economist Saul Eslake said the decision to enter into administration had not been a surprise, with many in the energy industry aware of the possible outcome following an unsuccessful arbitration.
He said while the government could assume ownership of the asset he believed a private sale was still possible but would depend on the price.
"It all depends on the price," he said.
"If Keppel wants to sell it at a price that someone thinks they'll make money out of, then that could happen, but the difficulty for a private investor would be figuring out what Basslink is worth.
"It's been well known for some time that Basslink could potentially run into difficulty and come onto the market for sale.
"I'm aware there have been some Asian based funds, I don't mean Singapore, but other parts of Asia who have sniffed around."
Mr Eslake said beyond the physical condition of the Basslink, additional factors within the domestic energy sector would play a role in any sale of the asset.
He said the proposed twin cable Marinus Link between Tasmania and the mainland was one such factor.
He said if the Marinus Link was to proceed then the competition between the two services could see the value of the Basslink decline, while if the project failed to materialise, a foray into the existing market could prove a significant investment.
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