Sydney Water near bust, and seeks a bailout; argues solution is for average householder to pay $275 more, a year
Posted by waterweek on 25 September 2007
According to Marian Wilkinson, writing in The Sydney Morning Herald, (22/9/2007, p.3), Sydney Water’s debt was set to double - to $7.5 billion - as its bottom line was hit by borrowing for the proposed desalination plant at Kurnell and plunging revenue caused by water restrictions. The Auditor-General recently raised concerns about Sydney Water’s debt levels and its financial sustainability.
Bail-out, please: In its submission to IPART Sydney Water said it “is not financially viable under current pricing arrangements”. Sydney Water has split the pipeline contract from the desalination plant because of the financial risks.
CEO not kept up at night: But Sydney Water’s chief, Kerry Schott, defended the debt, saying it “hasn’t got to a level that would make you stay awake at night”. However, she warned she would become very concerned if the Independent Pricing Tribunal (IPART) did not approve the big rises in household and business water bills she asked for this week.
Raise the prices to pay for desal: “We are heading into a lot of debt and we do need some price rises to help us pay the interest on it,” she told the Herald. Dr Schott has asked the tribunal to grant a staggered increase in water bills by 2011 that would see the average householder pay an extra $275 a year. Of ‘this, $110 would pay for the desalination plant.
Interest bill up six fold in four years: The request came as Sydney Water revealed the interest bill on its borrowings had leapt from $27 million to $180 million since 2003 as it invested money in recycling and other capital works;
• The corporation’s current borrowings of $3.3 billion do not include the cost of the desalination plant, which is put at $1.83 billion;
• Sydney Water’s revenue dropped because of household water restrictions and the corporation’s own water-saving measures, which hadsliced $380 million off the bottom line in the past three years.
The Sydney Morning Herald, 22/9/2007, p. 3
