Media Release

26 Jun 2007

Preferred Tenderer For Sydney's Desalination Plant

The Blue Water Consortium has been announced as the preferred tenderer to build a 250 million litre a day desalination plant at Kurnell.

Sydney Water will shortly sign a contract for around $960 million with the Bluewater Consortium, consisting of Veolia Water, John Holland Pty Ltd, SKM and Maunsell.

The plant is expected to cost around $730 million, and the seawater intake and outlets are estimated to cost around $230 million.

The estimated cost of the project is now $1.76 billion, including $500 million for the 18 kilometre distribution pipeline and $300 million for other project costs

Previously, it was estimated that the total project would cost $1.9 billion, including the water delivery system.

However, following this tender outcome the total cost of the project is down to $1.76 billion.

The lower cost is expected to reduce the impact on customer water bills to less than $2 per week.

There are three reasons for the decrease:
· An advanced design that has saved money.
· More certainty around the project means the contingency risk allowance is lowered.
· The costs of construction of desalination plants have stabilised.

The desalination scheme is the largest and most significant capital works project undertaken by Sydney Water since Warragamba Dam.

The massive undertaking will create around 800 jobs and provide a huge boost to the State’s economy.

Work will begin on the project in late July and will take 26 months to complete.

Sydney’s dams contain a total capacity of 2,600 billion litres. In the 1960s when Warragamba Dam was built, this represented eight years supply without any rainfall.

As Sydney has grown, this now represents just four years worth of water supply without any rainfall.

With a million new residents moving to Sydney over the next 25 years we need to act now to secure Sydney's water supply for the future.

Rainfall in Sydney is highly variable - rainfall is heaviest on the coast and often misses dams in the west. It is also highly sporadic, occurring in sudden intensive bursts between long periods of dry weather.

The desalination plant provides a new, non-rainfall dependent source of water to secure our city’s water supply for future generations.

FACT SHEET

· Work will begin on the project in late July and will take 26 months to complete.

· The plant will have no net greenhouse impact as the same amount of renewable energy will be generated to offset electricity used by the plant.

· Customers’ bills will increase by around $97 per year on average because of desalination. The average bill is currently $770 per year.

· Perth recently turned on its desalination plant and will soon build a second. A desalination plant is also being built on the Gold Coast.

· The Victorian Government recently announced it will proceed with a large plant, and South Australia is considering building a plant for the Olympic Dam mining site.

· Blue Water Consortium will design, build, operate and maintain the plant for 20 years. A fully owned subsidiary company of Sydney Water will own the plant.

· The operator will be required to consistently produce the same standard of drinking water that Sydney Water provides to its customers now.

· As part of the contract, the consortium will build a desalination plant capable of producing 250 million litres of water a day, which can be quickly scaled up by 125 million litres/day modules, up to 500 million litres a day if necessary. Each new module of 125 million litres/day size would take a further three months to add.

· The delivery pipeline will be built to the maximum capacity to avoid additional costs and further disruption down the track. In other words, if the plant is upscaled, no further pipe-laying would be needed.

· A separate tender to design and construct the 18 kilometre distribution pipeline was recently awarded to Connect Alliance, consisting of Bovis Lend Lease, McConnell Dowell, Kellogg Brown & Root, Patterson Britten & Partners and Environmental Resources Management.

· Work on the pipeline from Kyeemagh to Erskineville will begin once the Minister for Planning approves the pipeline project and Sydney Water’s Board of Directors approves the Alliance’s proposal, anticipated in October 2007.

· Approval was received in November 2006 to build the desalination plant as well as the intake and outlet tunnels.

· Sydney Water will keep the community informed throughout the desalination project and work with residents, businesses and other stakeholders to minimise disruption during construction.

· Estimated project costs are broken down as follows (approx):
Desalination plant, intakes and outlet systems - $960 million.
Distribution system to Sydney Water pipe network - $500 million.
Project costs - $300 million.
Total - $1,760 million.

 

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