Drinking water production starts at Oz desalination plant

The Australian state of Victoria has commissioned, a $6.1 billion desalination plant that has begun large-scale production of drinking water

Builder Leighton today said the plant was operating at a third of its capacity and would be completed later this year. According to chief executive Hamish Trywhit, the first water production was a significant milestone.

"We are now operating at around 33 per cent of the plant's capacity," he said in a statement.

Consortium AquaSure's contract with the previous Labour government, included a penalty clause under which a $1.8 million a day was leviable after 30 June 2012, in case the project was not delivered on schedule.

AquaSure had lodged claims amounting to over $1 billion against the government for delays attributed to cyclonic weather and industrial disputes.

According to the Department of Sustainability and Environment's submission at a parliamentary hearing last month, the plant would cost Melbourne Water customers $6.1 billion, which was $3 billion more than what former premier Steve Bracks had announced in June 2007.