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Friday, November 18, 2005

Hydro's profit rises despite dam falls.

Hydro's profit rises despite dam falls. 16/11/2005. ABC News Online

Hydro Tasmania has posted a record profit of just over $44 million, which is up almost $9 million on the previous year.

The result comes in spite of historically low dam levels and rising costs.

Hydro chairman David Crean has hailed the success of the Roaring Forties wind farm joint venture with CLP Power Asia.

The project has made $220 million since it was set up in 2001.

Dr Crean has also identified strong earnings in international consulting and new development opportunities in Asia, as key contributors to the record result.

He says an ambitious approach is paying off.

"We had the choice of the no growth path, basically a few more wind farms in Tasmania and then close shop, or the growth path which we chose, by taking on a 50 per cent equity partner and looking at growth opportunities overseas," he said.

Despite the company's success, its chief executive is still fending off doubts about the viability of Basslink.

Hydro will have to pay $92 million over 25 years, as well as a $50 million up front deposit, to rent the Basslink cable under Bass Strait.

The project will not earn Hydro a net export profit for two years.

Geoff Willis says Hydro is expecting enough savings and revenue from Basslink to foot the bill, and has managed its finances accordingly.

"The first year's cash flow will include that $50 million, and we're prepared for it," he said.

"That amount will be returned to the corporation at the end of the contract.

"The current year sees borrowings at the $1 billion level, which we have managed carefully.

"I think we're in good shape from a financial standpoint to manage that."

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