Keppel Infrastructure Trust (KIT) will make an additional arbitration provision of $23.8 million for its Australian subsidiary Basslink.

This is on top of the $76.2 million provisions the trust made for the fiscal year ended Dec 31 last year, the trustee-manager said yesterday in a bourse filing.

Basslink, which runs an undersea electricity cable in Australia's Tasmania, has advised KIT of the arbitrator's decision on costs for three arbitrations to resolve disputes over a cable failure in December 2015.

Parties in arbitration opt for private dispute resolution instead of going to court.

For the arbitration addressing a dispute notice issued by the State of Tasmania under Basslink's operations agreement, Basslink will pay the state A$7.2 million (S$7.4 million) and interest of about A$1 million in arbitration costs.

Basslink will pay a total of A$26 million in costs to Australian state enterprise Hydro Tasmania for two arbitrations - each A$13 million.

One arbitration addresses a dispute notice Basslink filed under its services agreement, while the other addresses a dispute notice Hydro Tasmania filed under the same services agreement.

Basslink has advised that it is in discussions with the State of Tasmania and Hydro Tasmania about paying these costs as part of Basslink's refinancing of its existing debt, KIT's trustee-manager said.

It does not expect the additional arbitration provision of $23.8 million to have any financial impact on the trust's distribution per unit for the financial year ended Dec 31 this year.

This is because there is no contractual recourse to KIT under Basslink's operations agreement, services agreement or financing arrangements.

KIT also does not rely on Basslink's cash flows for its distributions.

KIT units ended flat at 56 cents yesterday.

THE BUSINESS TIMES