Water Week

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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

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