Hunter Water to sell recycled water plant

THE BOARD of Hunter Water Corporation (Hunter Water) has resolved to explore the sale of its multi-award winning Kooragang Island Water Scheme (KIWS).

Proceeds from the sale will be used by Hunter Water as part of its commitment to invest over $1 billion in new water and wastewater infrastructure over the coming decade.

The KIWS is an advanced water treatment plant located within the industrial precinct of Steel River in Mayfield West which uses a micro-filtration and reverse osmosis process to produce recycled water superior in quality to rain.

Commissioned in November 2014, the plant is capable of delivering up to 3.3 billion litres of highly treated recycled water per annum, which is sold under a long term contract with fertiliser and explosives manufacturer Orica.

Hunter Water Interim Chief Executive Officer Jeremy Bath said the sale would have no impact on the operation of the Plant, on the local water supply or on water prices.

"The KIWS will continue to supply Orica with several billion litres of recycled water each year, regardless of who owns it and so the proposed sale will have no impact on the local water supply. The plant is considered by our pricing regulator to be an “unregulated asset” meaning any costs or income associated with the plant are not considered when determining water prices.

"Selling the KIWS benefits Hunter Water's balance sheet by freeing up capital to invest in the region over the coming decade and will also reduce expenditure on servicing the borrowings associated with its construction.

"Hunter Water intends to invest more than $1 billion to improve infrastructure over the coming ten years as part of our commitment to ensure the region is ready for the population growth forecast over the coming three decades.

"By carefully and selectively identifying assets that free up capital, Hunter Water can ensure we still get the benefits that come with infrastructure such as the KIWS, but without the substantial associated costs.

"The Kooragang Island Water Scheme has the potential to reduce Orica's demand on the potable water supply by up to 5%, effectively increasing Hunter Water’s storage levels by that same amount. It has also substantially increased the percentage of sewage we recycle to around 8% of total wastewater.

"Given the quality of the plant and the rarity of such assets on the open market, I expect there will be a substantial number of interested parties," he said.

Those wishing to register their interest are invited to contact Pottinger on +61 2 9225 8000.

The KIWS is currently owned by Hunter Water, but operated and maintained by Veolia.

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