Thursday, November 13, 2008

Desalination Plant: Why the rush?

(Port Stanvac, above, was originally opened as an oil refinery owned and operated by Standard Oil and Vacuum Oil, two of the world's largest oil companies. A few years ago, then owner Mobil Oil closed the site down, leaving a badly contaminated site which has yet to be remediated by Mobil. According to the SA Minister for Water Security, Karlene Maywald, the cost of puchasing the site, and its remediation, are part of the $1.34 million estimated cost of the desalination plant. It's lucky the taxpayers have such big pockets!)

The rush to proceed with the desalination plant at Port Stanvac is driven by two things:
- the need by government to be seen to be doing something about Adelaide’s water crisis,
- the commitment by the government through Public Private Partnership (PPP) arrangements to hand over opportunities for infrastructure investment to big monopoly companies.

One cannot fault a government that attempts to address the water crisis providing two circumstances apply:
- solving one problem does not lead to other problems occurring in its wake,
- the project represents value for money and is a benefit to the community.

The proposed desalination plant fails on both grounds!

Environmental Problems

The most obvious negative effect of the plant is the pumping out into the Gulf of St Vincent (left) of a plume of brine which, given its density and the sluggishness of Gulf waters, will settle like a blanket over a wide area of the seabed, destroying sea grasses, fish and mollusks. Larvae of species such as prawns, razorfish, scallops, abalone and sea urchins will be sucked into the intake pipes and killed. The plant is the most wasteful option in terms of the energy required for production of potable water.

We reject the EIS which minimizes and dismisses these problems!

Paying for Private Profit (PPPs)

All PPP projects are required to develop a Public Sector Comparator (PSC) to establish that they are better value for money than traditional methods by which governments meet the cost of infrastructure growth.

In practice, most PSCs never see the light of day, hidden under various “commercial confidentiality” clauses until well after the signing of contracts.

Not only will the plant need to be run for the financial benefit of private company profits and dividends to shareholders, but it is almost certain that a “take or pay” clause will be inserted in the contract to ensure that the government will keep channeling taxpayer dollars to the private operators at a certain agreed level whether or not the community requires water from it at a particular point in time.

The government has acknowledged that the consumers will be hit with annual price hikes in their water bills. Hendrik Gout, in the Independent Weekly (Nov 14-20, 2008) provides further evidence of how high these costs might spiral.

The SA Auditor-General, in his June 2008 report (written before Foley’s recent disclosures of SA exposure to the financial melt-down), warned:

"The credit market crunch experienced in 2007-08 and continuing at the time of finalising this Report, raise the credit and financing risk of the PPPs. In such extraordinary circumstances, progress of these transactions should be done with high degree of caution and may indeed need review of assumptions and information used to date. This may be a significant risk to the fundamental premise of whether a PPP provides a net benefit to the public compared to conventional public sector procurement."

Rather than proceeding with “a high degree of caution”, the government is pushing full steam ahead for a PPP desalination plant.

We reject the PPP as a model for public infrastructure development!

No to the desalination plant on environmental grounds!

No to paying for private profit for a public utility!

Demand a return to the social responsibility of governments!

The Organising Group for the Spirit of Eureka Committee (SA)


From the Spirit of Eureka Charter:

16. The acceptance by government that infrastructure such as education, health, public transport, energy, telecommunications, postal services, water and community services is vital to the collective well-being of all citizens and must be publicly owned and managed, and acceptance that the efficiency of public services must be measured in terms of the quality of service provided as well as economic cost.

20. Protection and promotion of a healthy and sustainable environment.

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