Public private partnership
The Victorian Desalination Project is being delivered as a public-private partnership (PPP) under the Victorian Government's Partnerships Victoria policy through a 30-year contract ending in 2039 between the state government and AquaSure.
PPPs are service-based contracts, where the private sector invests its capital in designing, building, financing, operating and maintaining a facility in return for payment for the delivered service. For more information refer to the Department of Treasury and Finance.
In the case of the Victorian Desalination Project, payments are made for water delivered to the quality and quantity required and for the security of having a facility built and maintained so that it is capable of delivering water if required.
$3.5 billion capital cost
AquaSure has funded the cost of building the plant, pipeline and power supply. The capital cost to build the project was $3.5 billion. AquaSure has also funded the ongoing operation and maintenance costs to 2039.
These costs are paid back to AquaSure over the 30 year contract period.
Payments are in two key components – water security payments, reflecting the security of having the desalination plant built and maintained so that it is able to produce water if we need it, and water usage payments, which reflects the variable costs of producing water when it is ordered.
This payment structure means we only pay for water if we need it, limiting the costs to the State Government and water customers to the cost of construction and maintenance costs when we don't need water.
The water security payment is made on the condition that AquaSure is capable of delivering the water that is ordered, to the required quantity and quality. To receive the water security payment, AquaSure must demonstrate that the project could have responded to an order for the supply of water.
The water usage payment is made only if water is ordered and delivered. Both the water security and the water usage payments are at risk if there is a failure to perform to the required standards.
Update as of 30 December 2016
*Refer to Minister's Statement at premier.vic.gov.au/statement-on-desalinated-water-order.
In March 2016, the Minister for Water announced Victoria's first order of 50GL of water from the Victorian Desalination Project.
The Victorian Government expects the water to be delivered in 2016/17 in line with the contract with AquaSure and the water order placed in March 2016. The contract is long term and contains provisions to deal with a range of scenarios including water not being delivered within agreed timeframes.