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Victoria desalination plant faces setbacks amidst looming deadlines

Victorian water retailers have been told there will be no extra bill charges until the state's desalination plant delivers on the government's water order.

The Victorian Desalination Plant was due to start production late last year in order to meet a 50GL order. However, during the restart process a piece of equipment was damaged, affecting the electricity transmission cable.

Water Minister Lisa Neville said she still expected plant operator Aquasure to meet its June 30 deadline.

“The damage is being assessed, with the start-up of the water order from the plant expected to occur in late February,” she said.

“I have met with Aquasure and they have assured me it will deliver the government’s order by 30 June, within the timeframe specified by the contract.

“The government has made it clear to water retailers that there will be no extra charges on water bills until desalination water is flowing.”

Neville said she also met with electricity provider AusNet Services and the parties had agreed to work together to resolve the issues.

But the delay has sparked a response from ratings agency Standard and Poor’s, which placed Aquasure on 'creditwatch' and warned the company it would have a “very limited buffer” to meet its deadline.

"Such a failure would result in potentially substantial financial consequences for Aquasure," S&P reportedly said.

The State Government placed the desalinated water order in March 2016 to provide a “buffer in Melbourne’s water storage levels and boost the security of Melbourne’s water supplies,” Neville said.

“The Government’s order will improve water certainty for families from Melbourne – from Geelong and Ballarat – and certainty for businesses, sporting grounds and local communities.”

Melbourne’s water storages are currently at 71.4%.