After receiving final government approvals recently, Basslink gave the go-ahead to lead contractors, Siemens and Pirelli, to begin work on the project, which is expected to be commissioned by the summer of 2005/2006.
Mr Gill said despite the Snowy Mountains-Victoria upgrade, there would be a tight balance between supply and demand in Victoria and SA this summer.
Speaking of power generation, some analysts believe AGL should team up with Origin Energy to buy the heavily-indebted Loy Yang power station in Victoria's La Trobe Valley.
As they are two of the three largest electricity retailers in the state, it makes sense according to industry insiders and commentators.
"Based upon current Horizon Energy market capitalisation of $30 million, the implied enterprise value for Loy Yang station is $3.72 billion and the implied costs for the 50% physical cover would be $1.65 billion for AGL and $1.24 billion for Origin," said Macquarie Equities analyst Ed Reekie.
"Based upon gearing of 25%, the required equity is $412 million for AGL and $310 million for Origin."
Other potential buyers for Loy Yang include Duke Energy, Tractebel and a syndicate of Malaysian groups: Genting, Tenaga and Sime Darby. However, no matter who purchases the power station, the buyer will face a $500 million bullet debt repayment due in May.
