Controversy continues as bid for Australia's largest desalination plant is approved

A controversial desalination plant, set to be Australia's biggest, will be built under an A$3.5bn (US$2.9bn) tender awarded to an international consortium led by French water treatment engineering company Degrémont.

The facility will be built in the drought-stricken state of Victoria by consoritum AquaSure. Aside from Degrémont, the group also includes Australian construction firm Thiess and Macquarie Group, the country's biggest investment bank.

Under the terms of the deal, AquaSure will build and operate the plant as part of one of the world's largest public-private partnerships. Degrémont estimates the facility will generate revenues of US$1.7bn over a 30-year period.

Aside from the consortium members, investment funds from Australia, the UK and South Korea have taken an equity stake in project.

The desalination plant will process up to 150 billion litres of water a year upon its slated completion in 2011. It will supply one-third of the water needs of Melbourne, Australia's second largest city, where local dam levels are only at 27 per cent of capacity due to a decade-long drought.

The award of the tender to AquaSure last week by the Victoria government stirred controversy in Australian media due to the substantial cost of the winning bid, which is A$400m more than the estimated A$3.1bn that was initially announced in 2007.

Part of the project's expense will be passed on to the state's taxpayers, who will see their home water bills rise by up to 64 per cent within four years.

The facility has long been opposed by green groups and some residents of the plant's future home of Wonthaggi, located 132km south of Melbourne.

Environmentalists have argued that recycling Melbourne's treated waste water – 200 billions of litres of which are pumped into the sea each year – would be a viable and less costly alternative for tackling the states on-going water shortages.

In response to the criticism, Victorian Premier John Brumby told The Australian newspaper that the new plant was necessary to cope with the drought conditions that increasingly impact the state. "We don't want to be a " pray for rain" government," he said. "We want to put in place measures that will give us certainty."

Plans are in place to make the desalination facility as environmentally sustainable as possible by ensuring its electricity is supplied entirely by wind farms.

Construction on a 63MW, 43-turbine wind farm is set to start in October in Glenthompson, located in southwest Victoria.

However, the A$200m Oaklands Hill project will only provide a small portion of the plant’s electricity needs and a larger A$850m, 183-turbine farm is also being planned for Macarthur, 270km west of Melbourne. The larger site will have a 300MW capacity and is expected to generate enough power to make the desalination plant carbon neutral.