The more it rains, the more Victorians are being asked to bail out the builders of the state’s troubled multibillion-dollar desalination plant.
AquaSure consortium builder Thiess Degremont, which was already seeking compensation estimated at hundreds of millions of dollars for rain delays, has recently added to its log of bad weather days at Wonthaggi, where the plant is being built.
The Age has learnt that after an initial claim against the state government revealed in October, the number of days claimed as lost due to weather has risen from 70 to 80, potentially adding tens of millions of dollars to the claim. AquaSure also says it has lost 193 days to industrial action.
The Age can also reveal that work will be ramped up at the plant as part of a deal that will see Thiess Degremont suspend and eventually drop its massive damages claim against the Construction, Forestry, Mining and Energy Union, the main construction union on site.
In return, the union will allow for an early return from the Christmas break and for a big boost to the amount of work done on Sundays, on rostered days off and on night shift. It will also drop its legal case over the alleged spying on workers.
The builder launched its Supreme Court claim after a number of ”unlawful” strikes, including a five-day stoppage in June which it said cost $5 million a day. Thiess Degremont spokeswoman Serena Middleton welcomed the CFMEU deal and said it would last until the end of the project.
With the plant as much as a year behind schedule, AquaSure has sought an extension of the deadlines under which the plant was to produce its first water this month and be fully operational by June 30, 2012.
AquaSure has now requested extension of the second deadline to the end of February 2013.
Under the contract between the government and AquaSure, payments of about $1.8 million a day were to start from the middle of next year, when the plant was supposed to be fully operating.
Failure to meet the deadline will deny the consortium crucial revenue needed to pay back project bankers.
In April, the government vowed to enforce the contract. However, Water Minister Peter Walsh has now confirmed that the government is prepared to look at the request for an extension. ”We would be irresponsible on behalf of Melbourne Water customers if we said we would not look at a proposal from AquaSure,” he said.
The Age understands Mr Walsh has asked for a more detailed proposal to consider.
The escalating compensation claim raises new questions about the public-private partnership model used for the desal project. A key aim of the model is to transfer of the risk of building and operating the plant to the private sector.
However, former Brumby government water minister and current shadow treasurer Tim Holding said the fact that large losses were being suffered by the builder - rather than the public - showed that the PPP contract had worked. ”I have to say, with all the things that have occurred, thank goodness the state government chose to build it as a public private-partnership,” Mr Holding said.
The rising compensation claim also lends support to the widely-held view by those close to the project that the contract deadlines were too ambitious.
But AquaSure chairwoman Chloe Munro said the consortium would not have sought the contract if it did not believe the deadline was achievable. ”Of course nobody would have bid without having a thoroughly worked out plan to meet the deadline,” she said.
Ms Munro said the problems at the site, including the weather, were ”way beyond” what could reasonably have been expected.
”I don’t think anybody ever bids on the basis of the most extreme scenario that you could possibly imagine,” she said. ”In some ways they have experienced - at least in terms of weather - extremes that have gone beyond the record.”
In the two years of building at Wonthaggi - 2010 and 2011 - rainfall has been about 20 per cent above the long-term average, according to Bureau of Meteorology data. But these two years are still well below the record year of 1995, which was about 20 per cent higher again.
