April 4 (Bloomberg) -- Snowy Hydro Ltd., an Australian hydropower producer set to be sold to the public, faces a delay of about eight months in the start-up of a A$150 million ($107 million) gas-fired generator because of construction setbacks.

The 320-megawatt Laverton North unit, which is being built in Victoria state for Snowy Hydro by Siemens AG, is now scheduled to be completed in August, Paul Johnson, a spokesman for the Cooma, New South Wales-based company, said today. Construction was originally scheduled for completion in December and then deferred until February.

Snowy, which owns a 3,756-megawatt hydroelectric power generating system in Australia's Southern Alps, has been expanding its business to include gas-fired generation and energy retailing. The delay in the plant is unlikely to result in a shortfall of Victoria's reserve supply capacity unless it lasts into the high- demand summer period, the power market manager said.

``It's not a problem in the period from now until the expected commissioning because it's not over summer,'' said Paul Price, a spokesman for the National Electricity Market Management Company, which runs the wholesale power market. ``It would have an impact on reserves if it was further delayed and it wasn't available until next summer.''

The initial public offer of shares in Snowy Hydro, due this half, may raise A$3 billion, EL & C Baillieu Stockbroking Ltd. estimates. Macquarie Bank Ltd., UBS AG and Goldman Sachs JBWere Pty were hired last month by the plant's owners, the federal, Victorian and New South Wales governments, to sell the shares.

Management Problems

Completion of the plant is being delayed because of project management problems and there are no labor disputes slowing work, said Dean Mighell, Victorian state representative of the Electrical Trades Union.

``It is a confined site with a lot of overhead work and Siemens has not been able to coordinate the contracting companies into a proper work schedule, which has meant huge delays in the way work's been carried out,'' Mighell said in an interview. Snowy Hydro may be entitled to claim damages from Siemens for the delay, he said.

Brad Voss, a spokesman for Siemens in Melbourne, confirmed Siemens has advised Snowy Hydro of a revised August date for completion of the plant.

``Workplace productivity has not met our expectations,'' Voss said, declining to elaborate.

Snowy Hydro is planning major maintenance work at its 1,500- megawatt Tumut 3 hydropower station, the largest hydroelectric plant in Australia, starting mid-year, Johnson said. The work will involve each of the station's six 250-megawatt units being shut down consecutively for a planned overhaul in a program that will last about two years in total, he said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net.

Last Updated: April 4, 2006 03:47 EDT