17 Dec 2009

Quenching Melbourne's thirst with the Victorian desalination project

by Marcus Davenport

With Melbourne's dam levels getting down to below 30 percent at time this year, the search for sustainable sources of drinking water has been a key priority for the Victorian Government. The result was the decision to build a desalination plant using a Public Private Partnership delivery method.

The successful bidder, the AquaSure consortium –Suez Environnement, Degremont, Thiess and Macquarie Capital Group – was advised by Clayton Utz throughout the bidding process for the project. Partner Marcus Davenport was a member of the team of partners dedicated to the project which also includedDan Fitts, Naomi Kelly, Brendan Groves and Simon Irvine.

So Marcus, what is the project all about?

"Our client, the AquaSure consortium, was shortlisted by the Victorian State Government as one of two bidders selected to tender to design, build operate and maintain the desalination plant and related works. When built, the plant is designed to be capable of producing 150 gigalitres of water per year, which makes it the largest in the Southern Hemisphere. It's also being designed with the capability to be upgraded to produce 200 gigalitres. Once it's fully up and running, it'll supply about one-third of Melbourne's annual drinking water requirements."

"AquaSure is required to have water production begin by around the end of 2011. This is an ambitious timetable, but water security is an important issue. It's not just the Victorian Government that is focusing on water security - there's a desal plant operating in Perth and Brisbane, and plans for a desal plant in South Australia - but the Victorian one is the largest one, and no doubt its success might give reassurance to other States looking into desalination."

The plant will be built in the Wonthaggi region - "I understand the location was selected because the brine produced as a by-product of the desalination process ultimately goes out into the ocean (after impurities are removed), and the location with its strong currents assists to efficiently disperse the brine " - and will be more than just a desalination plant, as Marcus and his colleagues discovered.

"It's fair to say that the size and complexity of the project and the tender process took many people by surprise. Effectively we are talking about four major projects in one - the desalination plant itself, two nearly 2km underground tunnels out to sea to transport the sea water to the plant and the brine back to the ocean, an 85km transfer pipeline to transfer water to the storage dams, and around an 80km underground transmission line to provide power to the plant."

Marcus' role on the project focused on aspects of the project deed and the ancillary documentation, including the contractual arrangements for both the purchase of power for the operation of the plant and renewable energy credits, which is a key part of the project, as the plant will use around 90 megawatts of electricity from the Victorian energy grid, and the renewable energy credits are intended to provide a 100 percent "green offset" of that power use.

What do you think you brought to the project?

"Stamina! Around 100 colleagues worked on aspects of the project from time to time and there was a core team of 20 or so who worked many long days and nights on the project over a 12 month period. It also reinforced for us in the team that we get the opportunity to work on the very biggest and most complex projects and that we have the capacity to undertake these sorts of deals, which is a good feeling to have. And at the end of it, you're relieved that all the effort has ultimately paid off for our client."

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.