ITOCHU to Participate in PPP Desalination Project in Victoria, Australia

August 3, 2009

On July 30, 2009, the Aquasure Consortium, of which ITOCHU is a member, was selected by the Victorian Government as a preferred bidder for the Victorian Desalination Project. The Project will be delivered as a Public Private Partnership (PPP)*1 and will be one of the largest desalination plants (150GL/year) in the world.

The core members of Aquasure are SUEZ ENVIRONNEMENT, Thiess, and Macquarie Capital Group. The project cost is expected to be around A$3.5bn, including construction of an RO desalination process plant, seawater intake, water pipeline, and transmission line. AquaSure will construct the plant by the end of 2011, and will then operate it for 27 years, providing a reliable water supply for Melbourne and surrounding regions. It will operate with a renewable energy offset leading to the construction of a new wind farm in Victoria.

ITOCHU Corporation will contribute A$100M in equity and second directors to the AquaSure project companies. Three major Japanese banks, Sumitomo-Mitsui Banking Corporation, Mizuho Corporate Bank, and The Bank of Tokyo-Mitsubishi UFJ, will also participate in an international banking group providing project finance for the project.

Background of Victorian Desalination Project and the Aquasure Consortium

Water shortages in Australia have become an increasing source of concern over the past few years. Victoria has experienced the most severe drought and lowest stream flows in its history. After a decade with two major droughts (1997/98 and 2002/03) and no stream-flows higher than the long-term average, Melbourne's storage reserves have fallen from near 100% capacity in 1996 to 26.5% capacity in May 2009, below the previous low of 28.5% in June 2007.
Within ten years, climate change, continued population growth and drought could result in shortfalls of drinking water of approximately 100 billion liters per year for Melbourne alone. To meet the medium-term water supply needs of Melbourne, a desalination project of 150GL/year will need to come online as soon as practical. The desalination plant is scheduled to transfer water by the end of 2011.
This desalination project will meet approximately 30% of the water needs of Melbourne, which currently has a population of 3.8 million people. The project will also be the first desalination project delivered by PPP in Australia, with other desalination projects in other major Australian cities having been delivered through traditional procurement.

ITOCHU is placing a strategic emphasis on the water sector, and has been very active in the Middle East, including Saudi Arabia. ITOCHU will accelerate and expand its activities in the water sector for countries in the Middle East, Australia, and Asia, where stress on the water supply is soaring.

  • (Note 1*) A Public Private Partnership (PPP) is a partnership between the public (government) and private sector for the purpose of more effectively delivering government projects (e.g. infrastructure projects) or government services.