4 December 2006
CAIRNS SETS OUT LICENCE CONDITIONS ON PPP CONTRACTS
Regional Development Minster, David Cairns announced arrangements on how out-sourcing contracts for both water supply and waste water will be treated under the Water Reform proposals.
This was set out as part of the launch of the public consultation on the draft licence of Northern Ireland Water Limited (NIWL).
The Water Service is currently taking forward two separate PPP contracts for the treatment of water supply and treatment of waste water over a 25 year period. Minister David Cairns said:
"Water Service's two recent PPP projects will provide over £200m of investment in the infrastructure upgrading and renewing 50% of Northern Ireland water supply capacity and 20% of our waste water treatment capacity. The licence has been drafted to take account of these specific Northern Ireland circumstances.
"An important consideration in the development of the draft Licence was to put in place a mechanism that would ensure that out-sourcing contracts were actively managed to promote value for money for the consumer, while providing NIWL with the financial security to commit to new additional value for money contracts.
The Minister explained how these costs would be dealt with by the economic regulator in its first price review in 2009.
"PPP contract costs will be treated as any other cost in the first and subsequent Price Reviews. They will be subject to the same scrutiny for efficiency by the economic Regulator as any other cost."
Prior to the first price review during the phasing-in period of tariffs, if there are any material changes in projected PPP contract costs, such changes will be scrutinised by the Regulator and if found unacceptably inefficient will be borne by the company and not adjusted in tariffs. The consumer is further protected by the obligation placed on the company to operate the new contracts to deliver value for money.
NOTES TO EDITORS:
1. Under the draft Water and Sewerage Services (NI) Order 2006 the appointed water and sewerage undertaker is required to comply with conditions set out in the Instrument of Appointment (Licence).
2. The details of arrangements for the treatment of PPP contract costs are contained within draft Condition B of the draft Licence: Charges
3. The two PPP contracts are:
Omega Wastewater Treatment - upgrading 6 existing wastewater treatment works at Ballynacor, Bulleey's Hill, Seagoe, Armagh, Richill and Ballyinckard, construction of a new works for North Down/Ards and provision of a sludge disposal solutions for NI.
4. The draft licence has been issued for consultation on 4 December. The consultation period closes on 9 February. The licence contains a number of conditions placed on Northern Ireland Water Limited, including those relating to out-sourcing contracts.Alpha Water Treatment - upgrading/rationalisation of existing treatment works at Ballyinrees, Castor Bay, Dunore Point and Forked Bridge.
Click here to print this press release.
