Desal plant to profit from drought misery

SYDNEY'S desalination plant operators demanded an extra $38.4 million just to do what the plant was built for - provide fresh water.

As the city's dam levels plunge to 65.3 per cent, that was the exorbitant price the Sydney Desalination Plant Pty Ltd put on cranking up its operation.

Sydney Water already forks out $188 million a year, at a cost of $86 per household, to keep the plant in mothballs.

 

Workers get busy at the Sydney Desalination Plant in Kurnell on Wednesday. Picture: Darren Leigh Roberts
Workers get busy at the Sydney Desalination Plant in Kurnell on Wednesday. Picture: Darren Leigh Roberts

 

The Independent Pricing and Regulatory Tribunal, which sets the desalination plant's charges, told the consortium­ it could have just $12.65 million as a one-off start-up cost, according to its latest report.

Despite falling dam levels, Sydney Water has not yet asked the plant to press the "go" button.

In what has been ­described as one of the state's worst deals, The Daily Telegraph can reveal the plant has a contract that gives it eight months to get up to its full capacity of 250 million litres­ per day of water - or about 15 per cent of Sydney's drinking water.

The plant is in test mode as it completes repairs after the 2015 tornado that ripped the roof off.
The plant is in test mode as it completes repairs after the 2015 tornado that ripped the roof off.

"It's outrageous," Opposition water spokesman Chris Minns said, adding the Liberal government deal to privatise the desalination plant in 2012 was the "one of the most bizarre privatisation deals we have seen".

The operator Sydney Desalination­ Plant (SDP) Pty Ltd, a consortium of three foreign and Australian pension funds, will make $56.2 million profit­ this year alone for members, including 323,000 retired and working Canadian teachers in the Ontario Teachers' Pension Plan.

When up and running, the desal plant will cost $129 per household. Source: Google Maps
When up and running, the desal plant will cost $129 per household. Source: Google Maps

That pension fund owns 50 per cent of the plant.

The other 50 per cent is owned by the Utilities Trust of Australia and The Infrastructure Fund. Together they paid $2.3 billion to buy the plant, which Sydney Water now pays $188 million a year to maintain.

"The big fees that consumers pay would more than cover their interest payments," Mr Minns said.

When up and running, the cost to Sydney Water would be $237.4 million a year, or $129 per household.

While the deal is that the plant will begin operating when dam levels reach 60 per cent, there is nothing to stop Sydney Water putting it on notice now, a source said.

The plant is in test mode as it completes repairs after the 2015 tornado that ripped the roof off the Kurnell plant and will be operational by December.

An SDP Pty Ltd spokesman said its profits were set by IPART.

"The return on capital is determined by IPART and reflects a reasonable return on the approximately $2 billion of invested capital in the SDP," he said.

Utilities Minister Don Harwin said: "The desal plant at Kurnell is in the final phase of testing and will be ready by December as planned.

"There will be a short lead-in time before the plant starts producing water."

He said greater Sydney dam storages held enough water to supply the city's population for another two years - without rain.



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