Analysis of Public Private Partnerships in Victoria

The assignment involves analyzing the Victorian desalination project, which was a public-private partnership (PPP) project that aimed to provide a reliable source of drinking water for Melbourne. The project involved the construction of a desalination plant at Wonthaggi and a pipeline to transport the treated seawater to Melbourne. The analysis includes an examination of the risks involved in PPP projects, as well as the environmental impact of the project on the Powlett River estuary. The document also provides information on the compliance with environmental performance requirements during the construction phase. The assignment is likely related to water management or environmental science courses.

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
INSTITUTIONAL AFFILIATION(S)
STUDENT NAME
[Pick the date]
Table of Contents

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
2
INTRODUCTION......................................................................................................................3
REGULATIONS APPLICABLE TO VDP PROJECT.............................................................4
ENVIRONMENT EFFECTS ACT 1978 (EES Act)..............................................................4
THE ENVIRONMENT PROTECTION ACT 1970 (EP Act)...............................................4
THE RENEWABLE ENERGY ACT 2006...........................................................................5
CATCHMENT AND LAND PROTECTION ACT 1994 (CMAs).......................................5
FLORA AND FAUNA GUARANTEE ACT 1988 (FFG ACT)...........................................6
CONTRACT USED FOR VDP PROJECT...............................................................................6
RISK INVOLVED IN PPP CONTRACT..................................................................................7
REFERENCES...........................................................................................................................9

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
3
INTRODUCTION
In the South Gippsland beside Wonthaggi, The Victorian Desalination Plant (VDP) was built
up by Aquasure consortium. It is a public-private partnership between Aquasure and
Victorian Government. The main scope behind this desalination plant was to provide with
water pipeline for transferring water to the Melbourne regions and create a water network
along with subversive power supply near Cardinia. Thiess Degremont Joint Venture made a
contract with Aquasure for constructing and designing the venture while TDJV is supposed to
maintain and operate VDP. Initially the project was referred as Environmental Effect
Statement in environmental management framework but gradually it was developed and
included with contractual requirements for both Maintenance and Operation (O&M) and
Construction and Design (D&C) teams of the project (VICTORIAN DESALINATION
PROJECT , 2010).
According to the environment management agenda, the project needs to be planned and
constructed according to the requirements laid in Environmental Performance document
which is included in Project deed (Appendix S3) (SUEZ Australia and New Zealand, n.d.).
Also the Victorian environmental legal needs and commonwealth requires to be fulfilled in
order to support environmental performance requirements. One of the major objectives for
both constructing and operating teams was to manage the venture without hampering
environmental conditions of the regions. In order to meet water requirements in future, the
Australian Government announced to initiate Reverse Osmosis (RO) desalination plant in the
year 2007 to provide drinking water from seawater. According to the plan, Melbourne would
get sufficient water supply along with providing a set up of rainfall independent water supply
system (Aquasure, 2017).

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
4
REGULATIONS APPLICABLE TO VDP PROJECT
 ENVIRONMENT EFFECTS ACT 1978 (EES Act)
In the year 2007, the planning Minister decided that VDP’s environmental effects shall be
documented under EE Act which was prepared in response to the Scoping Requirements
issued by the Ministers in 2008 (Madden, 2009). The EES estimated that 15000 workers in
construction site along with 26000 workers in manufacturing unit were working for the site.
It was found that many workers working there did not belonged to the local areas and thus the
economic development in Gippsland area was decreasing. Under the EES Act, the facilitation
of neighbouring industries was the main factor to determine the economic benefits in the
local region along with providing them with employment and regional income. The economic
growth is also possible if VDP is able to supply high voltage power to Gippsland and Bass
Coast areas. Uncertain impact of marine structures in VDP region would be minor as
compared to the social and economic benefits of project. Regional tourism is also supported
as under EES Act, environmental violation is prohibited which states that impact on regional
tourism becomes minor.
 THE ENVIRONMENT PROTECTION ACT 1970 (EP Act)
This act established various principles that are directly or indirectly related to the
management of waste from desalination plants and its generation. PIW is the stream in which
wastes from VDP flows and under EPA, it needs to be disposed to landfills under state
license. According to the waste, it will be categorised and sent to landfills those are capable
and possesses capacity to hold it. According to a survey, the VDP had concluded that they
cannot minimise more wastage as it would then hamper the quality of water (Langdon, 2010).
With the imposition of EPS, the waste minimisation and its management have effectively
become dynamic and reusing possible resources is initiated. Disposing of pre treated wastes

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
5
to landfills rather than oceans shall be adopted to make RO desalination process more
consistent (David, 2013).
 THE RENEWABLE ENERGY ACT 2006
According to Victorian Renewable Energy Target system, it requires electricity buyers to
obtain a specified percentage of electricity from its renewable sources. The basic purpose of
this act is to encourage investment for generating renewable energy. Protecting environment
under EP Act requires commercial users of water and energy to implement and prepare
Resource Efficiency plans to improve and utilise the available resources efficiently. Carbon
Pollution Reduction Scheme introduced by Australian government would replace MRET and
other carbon polluting markets by permitting them an estimated level of emissions. Although
it had not been confirmed that the same will apply to VDP also, but the effects of it can be
seen in the project. Therefore under this act VDP will be entailed to minimise GHG
emissions and would not only provide safe drinking water but also environment friendly
atmosphere (Willingham, 2017).
 CATCHMENT AND LAND PROTECTION ACT 1994 (CMAs)
Beneficial uses and protection of ground water is provided by SEPP (WoV) under the
statuary framework of policies whereas to manage water health, special law was introduced
namely Catchment and Land Protection Act which was responsible for maintaining water
hygiene under their authority. According to this act the regions in Westernport, Port Philip
along with West Gippsland are regulated under a framework in which strategies related to
river health is monitored. Under the Water Act 1989, CMAs have the authority whether to
permit or not in the designated water supply regions. Thus with the help of CMAs, the
Powlett river’s water will not get violated or have bad impact on flood system (WEST
GIPPSLAND CATCHMENT MANAGEMENT AUTHORITY, 2015). The pipeline system

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
6
of water supply will become predictable and thus avoid hampering vegetation and reduction
in marine ecological assets.
 FLORA AND FAUNA GUARANTEE ACT 1988 (FFG ACT)
The basic reason behind introducing FFG Act is to promote conservation of flora and fauna
in natives of Victorian region. It helps to manage processing those which prove to be
threatening to the genetic diversity of environment. The chief goals of FFG Act state that it is
mandatory to maintain the ecological communities by commercial centres (LGPro, 2017).
Nearby range of species in bioregion along with prevention of declination in ratio of rare
species or rare ecological community is also looked after under this act. All the native
vegetation is protected under Victorian NVMF stated under the chief document in
government policy. Preservation of Flora and Fauna under EPBC Act in which VDP focuses
on implication under section 18 and 18A to prevent threatened community and species. If any
loss of inhabitant takes place in the local provenance of plant, it will be compensated by local
EVCs. Therefore, it can be said that due to FFG Act and EPBC Act, any significant effect is
avoided at least to those which are listed under Flora and Fauna Act.
CONTRACT USED FOR VDP PROJECT
The Victorian Government gave the contract to Aquasure consortium in the year 2009 which
consisted of Degremont Macquairie capital and Thiess. They were responsible for designing,
financing and build the project along with operating and maintaining the desalination project
for the next thirty years. A contract of $43 million was given to OLEX for supplying
alternative high voltage current. Later in the year 2012 the plant was able to achieve full
capacity after passing RTF tests (Kable Inteligence Report, 2018). Another subcontract of $6
million was given to Ausform for building water retaining systems. Along with these many
other contracts were made by this public private partnership firm in order to complete the

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
7
project within the given deadline along with meeting the legislations made by the
government. Both construction and the operational teams are managed by the Environmental
Management Plans that requires the project to be fulfilled after compiling all the rules and
regulations (e Victorian Government Department of Environment, Land, Water and Planning,
2015). Aquasure deed with Victorian Government is been approved for construction and
maintenance phase for a limited time period.
RISK INVOLVED IN PPP CONTRACT
PPP can be defined as a contract in which government and private sector combines to provide
public service or infrastructure. Although this is most appropriate for huge projects, the risks
involved with such contracts cannot remain unseen. As an organisational structure it is very
important to abide by contract rules and regulations in order to minimise risks and
difficulties. Any issue in politics or home country or corruption creates disinterest among
pubic and thus such firms are always vulnerable to nation’s political control. During the
development stage, such projects can face difficulties due to geological condition or the
government control over sites due to community infringement laws (Bing Li, n.d.). The
duration of completion in projects can also determine the risks involved as longer the
construction phase is, lesser the profits earned during the earning stage will be reduced by
private sectors. As VDP was contracted for period of 30 years, the private firm partner may
lose its profit sharing years if the construction phase is extended which shows monetary risk
involved. Balancing commercial realities and governmental policy is again tough as
regulation and excessive governmental control may hamper the quality of finished product.
Most important risks involved in infrastructure projects are faced if any geotechnical
surveyor or contractor claims increase in contract price or provide with bad quality of work.
Since VDP is protected under various environmental laws, it can sometime become difficult

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
8
to maintain a balance between environment and required condition. ‘Permitting risks’ is
another important risk involved in which the contracting teams require getting permission
from the government regarding every change in management system and construction
process. As government requires taking time for passing bills through different stage or area,
many times the process becomes slow and lengthy. Finally the appropriation risks are
involved when the public agency fails to meet financial requirement for the project. This risk
can affect the project where public agency is bound to make payments for assessing public
private partnerships. Risk involved by political issue or change in country GDP can also
affect the portion of public sector revenues. Thus by making contracts under PPP, the risk is
been divided proportionally between the government and private sector thereby securing both
client and contractor from getting violated (Innovative, 2012).

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
9
REFERENCES
Aquasure (2017) Aquasure: The Victorian Desalination Project, 29 Jun, [Online], Available:
https://www.aquasure.com.au/ [24 Mar 2018].
Bing Li, A.A.a.C.H. Risk involved in Public Private Partnership projects, [Online],
Available: http://www.arcom.ac.uk/-docs/proceedings/ar2001-895-
904_Li_Akintoye_and_Hardcastle.pdf [24 Mar 2018].
David, B. (2013) Paying for the Victorian desalination plant:A case study in regulatory
ambiguity, 29 Jul, [Online], Available:
http://www.esc.vic.gov.au/wp-content/uploads/esc/44/443ccc28-1966-421d-bfc2-
7d6a920e080c.pdf [2018 Mar 2018].
e Victorian Government Department of Environment, Land, Water and Planning (2015)
Victorian Desalination Project, Mar, [Online], Available:
https://www.water.vic.gov.au/__data/assets/pdf_file/0013/54202/Fact-sheet-project-costs-
March-2015.pdf [24 Mar 2018].
Innovative (2012) Risk Assessment for Public-Private Partnerships: A Primer, Dec, [Online],
Available: https://www.fhwa.dot.gov/ipd/pdfs/p3/p3_risk_assessment_primer_122612.pdf
[24 Mar 2018].
Kable Inteligence Report (2018) Wonthaggi Desalination Plant, Victoria, [Online],
Available: http://www.water-technology.net/projects/wonthaggidesalinatio/ [24 Mar 2018].
Langdon, D. (2010) COMPLIANCE WITH ENVIRONMENTAL PERFORMANCE
REQUIREMENTS QUARTER 1 2010 QUARTERLY REPORT TO THE MINISTER FOR

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
10
ENVIRONMENT AND CLIMATE CHANGE , Apr, [Online], Available:
https://www.water.vic.gov.au/__data/assets/pdf_file/0019/54262/IREA-Quarterly-Report-Q1-
2010-JanuaryMarch.pdf [24 Mar 2018].
LGPro (2017) Review of the Flora and Fauna Guarantee Act 1988 Consultation , Mar,
[Online], Available:
http://lgpro.com/downloads/Representation/LGPro_Submission_response_to_the_Review_Fl
ora_and_Fauna_Guarantee_Act_1988_-_28_March_2017.pdf [24 Mar 2018].
Madden, J. (2009) VICTORIAN DESALINATION PROJECT ASSESSMENT under
ENVIRONMENT EFFECTS ACT 1978 , Jan, [Online], Available:
https://www.planning.vic.gov.au/__data/assets/pdf_file/0016/13516/Final_Assessment_-
_Victorian_Desalination_Project.pdf [24 Mar 2018].
SUEZ Australia and New Zealand Victorian Dasalination Project, [Online], Available:
https://www.degremont.com.au/media/general/VDP_8pp_FINAL.pdf [24 Mar 2018].
VICTORIAN DESALINATION PROJECT (2010), Jun, [Online], Available:
https://www.aquasure.com.au/uploads/files/ProjectOverview.pdf [24 Mar 2018].
WEST GIPPSLAND CATCHMENT MANAGEMENT AUTHORITY (2015) Powlett River:
Estuary Management Plan, Aug, [Online], Available: http://www.wgcma.vic.gov.au/wp-
content/uploads/2015/10/Powlett-River-Estuary-Management-Plan-2015-Final.pdf [24 Mar
2018].
Willingham, R. (2017) Renewable energy target of 40pc by 2025 to be enshrined in law by
Victorian Government, 23 Aug, [Online], Available: http://www.abc.net.au/news/2017-08-
23/victoria-energy-target-of-40pc-by-2025-to-be-enshrined-in-law/8833276 [24 Mar 2018].

VICTORIAN DESALINATION PROJECT
LEGAL RISK MANAGEMENT
11