NQ Water has detailed its successful offer to take control of all the twin cities’ bulk water assets.
NQ Water made the offer for two reasons, said Chairman Ian Hamilton.

The first was to come in line with changes to governing legislation. Secondly, NQ Water hoped to influence the culture of water provision to gain maximum efficiencies, he said.

The offer is broken down into a series of payments for the assets, tied grants and compensation.
A previous offer was made on the strength of the net present value of those assets giving a commercial return to the Board of around six to seven per cent.

Thuringowa City Council was more comfortable paying the written down value of the assets said Mr Hamilton.

"Both Townsville and Thuringowa City Councils have acknowledged the financial, operational and planning benefits in the current proposal," Mr Hamilton said.

"The benefit to the Board has been confirmed by the state’s financial umpire, Queensland Treasury Corporation and our legal advice confirms it is lawful.

"In an effort for the Board to achieve a commercial level of gearing and provide community benefits, we amended the proposal so that all aspects fell within the Board’s jurisdiction.

"That meant that approval was not required from both councils as was the case previously. Either council had the freedom to accept or reject the amended proposal as it related to them. We are pleased they accepted."

The breakdown is according to the council’s contribution to the Board through consumption.

Changes to the Local Government Act detailed the direction of NQ Water to act as the manager of bulk water supply to the twin cities and laid the ground rules towards commercialisation, said Mr Hamilton.

"NQ Water labours under one of the strictest regulatory frameworks of any utility," he said. "At the same time, we work in the interests of customers for outcomes that ultimately improve the lifestyle of the community."

"We have been considering our options in meeting additional regulatory obligations for some time now and this is the best outcome for the board and the community."

The restructure addressed National Competition Policy reforms making it a win-win situation for the Board and ratepayers of Townsville and Thuringowa, Mr Hamilton said.

"NQ Water has to pay tax equivalents and dividends as a return on assets under NCP and there was a chance the money could have been be lost from the community," he said.

"This financial year we are expecting to pay Townsville and Thuringowa City Council around $14 million in dividends and tax equivalents.

"Last year the Board took the option of becoming a local government. Had we remained a statutory authority, NQ Water may have been paying the state government. Instead the benefits are now guaranteed to flow back to the community."