News
UUA promises $2.5b water project benefit to Goldfields
30th June 2005
The draft report of the Economic Regulation Authority released today fails to consider the estimated $2.5 billion regional economic benefit flowing from a proposal to double the water supply to the Goldfields.
United Utilities Australia Managing Director Graham Dooley said the ERA had failed to address key terms of reference in its inquiry into its plan to build a desalination plant and pipeline to pump up to 100ML a day of fresh water to the Goldfields.
The ERA draft report has concluded that, when potential economic development benefits are ignored, the benefits of the scheme are around five per cent lower than the costs. In UUA’s view, the substantial growth prospects more than outweigh such a small economic cost differential.
Mr Dooley said UUA was ready to accept the challenge thrown down by the ERA and was now seeking to start negotiations with Government to build a 37GL a year desalination plant at Esperance and water pipeline to Kalgoorlie. Mr Dooley said it was clear the six month inquiry had not evaluated the potential regional economic benefits of the $440 million project. UUA rejected ERA chairman Lyndon Rowe’s comment that the benefits of the project did not outweigh the costs.
The report failed to quantify the value of the benefits of the project.
“This is a clear breach of the Premier’s commitment to UUA that a full cost benefit analysis of our project would be carried out,” Mr Dooley said. Nor did it address the impact on Treasury payments to the Water Corporation for supplying water to Kalgoorlie households. Despite independent economic consultants assessing the economic benefit to the region at $2.5 billion, the ERA’s only comment on the issue was that “there is a possibility that the Esperance-Kalgoorlie proposal would enhance regional economic development … but the extent was unclear”.
UUA disputes some of the ERA’s draft findings, such as the level of cost claimed by Water Corporation to deliver water to Kalgoorlie, but was prepared to enter into commercial negotiations to supply water. For example, the report claims that Water Corporation can expand the existing 100-year-old C Y O’Connor pipeline from 34ML/day to 77ML/day - a 117 per cent increase in volume - at no cost penalty. This seems improbable.
Mr Dooley said unless UUA developed a new water supply for the region, communities along the pipeline route would continue being supplied with poor quality drinking water and even getting their drinking water trucked in. And the mining industry would continue to face prohibitive charges from the Water Corporation to expand their water supply or rely increasingly on uncertain and very saline groundwater sources. Mr Dooley said after four years of pre-feasibility work, UUA was now ready to enter into negotiations to sell bulk water to the Water Corporation. United Utilities Australia was prepared to co-operate with Government to develop the project to feasibility stage and would then seek the necessary statutory approvals to start construction in 2006.
Mr Dooley said there was no risk to the WA Government in the project proceeding to the next feasibility stage but enormous potential benefits to the Goldfields region and the State. Funded, built and operated by United Utilities Australia, the project would more than double the supply of water to Kalgoorlie and the Goldfields and employ 200 people during construction, Mr Dooley said.
Mr Dooley said the ERA report confirmed the cost of water to households would remain the same but the quality of water, particularly in Esperance, would be higher. “This project will bring more prosperity and population growth to this arid but mineral rich region of the State,” he said. The economic benefits of providing more water to the parched region would expand industrial development, investment and jobs and improve quality of life. The ERA was asked in January by Treasurer Eric Ripper to investigate the benefits of the project and today released its draft report on the cost of supplying bulk potable water to Kalgoorlie-Esperance.
UUA would now:
* Seek a mandate to sell water to the Water Corporation in
the Goldfields;
* Commence the environmental approvals process;
* Continue negotiations with miners and farmers to supply them
with potable water;
* Start the technical development of the project; and
* Negotiate the financing of the project.
Mr Dooley said it was surprising that not all the terms of reference laid down by the Treasurer had been addressed in the draft report. But the company was confident that this oversight would be addressed in the final report, due in two months.
United Utilities Australia is a subsidiary of United Utilities Plc, one of the top 50 companies in the UK, which provides water to more than 15 million people worldwide.
Editors Note: Artist’s impression of Esperance desalination
plant and map of pipeline route available electronically
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