Water Resource (Great Artesian Basin) Plan Sale of general reserve unallocated water: Tender assessment report

Transcription

1 Water Resource (Great Artesian Basin) Plan 2006 Sale of general reserve unallocated water: Tender assessment report

2 This publication has been compiled by Water Services Support, Department of Natural Resources and Mines State of Queensland, 2014 The Queensland Government supports and encourages the dissemination and exchange of its information. The copyright in this publication is licensed under a Creative Commons Attribution 3.0 Australia (CC BY) licence. Under this licence you are free, without having to seek our permission, to use this publication in accordance with the licence terms. You must keep intact the copyright notice and attribute the State of Queensland as the source of the publication. For more information on this licence, visit The information contained herein is subject to change without notice. The Queensland Government shall not be liable for technical or other errors or omissions contained herein. The reader/user accepts all risks and responsibility for losses, damages, costs and other consequences resulting directly or indirectly from using this information.

3 Contents Executive summary 1 Introduction 3 Background 3 Process for release of unallocated water 3 Tender process 4 Release of unallocated water 4 Reserve price 4 Public tender 4 Public notices 5 Tender and supporting documents 5 Tender conditions 5 Eligibility to hold a water licence 6 Evaluation criteria 6 Assessment panel 8 Evaluation panel 8 Technical panel 8 Probity advice 8 Opening of tenders 9 Assessment of tenders 9 Conforming tenders 9 Total bid volumes and price ranges 10 Assessment against the evaluation criteria 10 Requests for additional information 10 Revised bid prices 13 Deciding successful tenders 13 Offers to tenderers 13 Granting of water licences 17

4 Executive summary This report summarises the process for evaluating tenders and the outcomes of the tender process undertaken for the release of unallocated water from the general reserve in the Surat, Surat North and Surat East management areas in the Great Artesian Basin. The Queensland Government announced the release of water from the general reserve in the Great Artesian Basin on 30 May The areas of release and the volumes available included: 5,000 ML from the Surat management area 2000 ML from the Surat East management area 200 ML from the Surat North management area The Water Act 2000 (the Water Act) provides for a water resource plan or resource operations plan to include a process for granting, reserving or otherwise dealing with unallocated water. A regulation made under the Water Act may also state a process for granting or otherwise dealing with unallocated water in the plan area for a water resource plan or resource operations plan. Tenders closed on 26 July 2013 and submissions received were opened on 2 August Fifteen tenders were received, five in the Surat, three in Surat North and seven in the Surat East management area. Each tender was checked against a list of conditions required to be deemed a conforming tender. Members of the assessment panel conducted independent preliminary assessments of each tender against the evaluation criteria detailed in the tender documents and identified any additional information that would be required to complete the assessment of the tenders, in accordance with clause 4.17 of the tender document. The chief executive (Director-General, Department of Natural Resources and Mines) of the department decided whether each tender was successful or unsuccessful after considering the tenders and recommendations of the assessment panel. Tenders that met the criteria and included bid prices that were at least the were recommended to the chief executive as successful tenders. Of the 15 tenders received 12 were successful. Eleven accepted an offer for a water licence with one declining the offer. A summary of the successful tenders is available in table 1 below. 1

5 Table 1: Successful tenderers Tender reference number Management area, management unit Bid price ranking Price per ML Licence volume ML/year Purpose 01 Surat East, Surat East 3 02 Surat North, Surat North 2 06 Surat East, Surat East 3 Ranked 3 rd above the Ranked 4 th above the Ranked 6 th above the ML Feedlot ML Feedlot expansion ML Feedlot 07 Surat, Surat 6 Ranked 7 th above the ML Feedlot 08 Surat East, Surat East 3 09 Surat East, Surat East 3 10 Surat East, Surat East 3 Ranked 6 th above the Ranked 1 st above the Ranked 4 th above the ML Feedlot expansion ML Feedlot expansion ML Feedlot 11 Surat, Surat 6 Ranked 7 th above the 12 Surat, Surat 6 Ranked 5 th above the ML Feedlot ML Feedlot 14 Surat North, Surat North 2 15 Surat North, Surat North 2 Ranked 2 nd above the Ranked 2 nd above the ML Hard rock quarry operations ML Hard rock quarry operations 2

6 Introduction This report summarises the process for evaluating tenders and the outcomes of the tender process undertaken for the release of unallocated water from the general reserve in the Surat, Surat North and Surat East management areas in the Great Artesian Basin. Background The Queensland Government announced the release of water from the general reserve in the Great Artesian Basin on 30 May A map of the management areas is provided in Appendix 1. Prior to this announcement, the Department of Natural Resources and Mines (the department) conducted an analysis of the demand for groundwater in the Surat, Surat North and Surat East management areas of the Great Artesian Basin. The groundwater resources of the Great Artesian Basin are regulated under the Water Resource (Great Artesian Basin) Plan (GAB WRP), which is implemented through the Great Artesian Basin Resource Operations Plan (GAB ROP). These plans underpin the security of existing water entitlements, the environment, the protection of springs that support significant cultural and environmental values, and to make water available for new users. The current water resource plan permits the release, from the general reserve of unallocated water, of up to: Surat Management area 3000 ML from the Surat 6 Management Unit 2000 ML from the Surat 7 Management Unit Surat East management area 1000 ML Surat East 3 Management Unit 1000 ML Surat East 4 Management Unit Surat North management area 100 ML from the Surat North 2 Management Unit 100 ML from the Surat North 3 Management Unit Hydrologic modelling undertaken during the development of the GAB WRP demonstrated that these volumes of unallocated water can be made available without comprising the environmental values of the Great Artesian Basin or the security of existing water entitlements. Process for release of unallocated water The Water Act 2000 (the Water Act) provides for a water resource plan or resource operations plan to include a process for granting, reserving or otherwise dealing with unallocated water. A regulation made under the Water Act may also state a process for data/assets/pdf_file/0011/106031/gab-rop.pdf 3

7 granting or otherwise dealing with unallocated water in the plan area for a water resource plan or resource operations plan. The GAB WRP states that unallocated water held as a general reserve may be granted as water licences under a process stated in the resource operations plan. The GAB WRP also details chief executive considerations for preparing and implementing a process for releasing unallocated water. The GAB ROP states that the process for granting unallocated water must be in accordance with the requirements outlined in Part 2, Division 1C of the Water Regulation The GAB ROP details the criteria that must be considered by the chief executive when deciding an application for unallocated water. Under the Water Regulation 2002, unallocated water can be granted through either a competitive process (for example, public auction or tender) or a process without competition which involves negotiations between the chief executive and the proponent. The demand analysis that was undertaken on the release of unallocated water supported a competitive process for the release of the general reserve. The competitive process prescribed under the Water Regulation limits the release of unallocated water to either a public auction or tender. Tender process Release of unallocated water The regulatory framework described above states that the Chief Executive is responsible for making decisions about the release of unallocated water. On 30 May 2013, the chief executive decided to make 7200 ML of unallocated water from the general reserves in the Surat, Surat North and Surat East management areas. The Minister for Natural Resources and Mines announced the Queensland Government s release of unallocated water from the general reserves in the Surat, Surat North and Surat East management areas on 30 May Reserve price The Queensland Government set a confidential to ensure that water resources are allocated to the best and highest value use. Determination of the was based on available water market information, types of water products available and policy drivers for releasing the general reserve of unallocated water in the Surat, Surat North and Surat East management areas. The was not disclosed to the market prior to the close of tenders. The reserve price is also expected to remain confidential because any disclosure of this may suppress market drivers for subsequent bid prices in future unallocated water release processes either in the Great Artesian Basin or other parts of Queensland. Public tender A tender process was chosen for the GAB WRP unallocated water release from the general reserves for the Surat, Surat North and Surat East management areas. A tender process was considered to be the fairest and most cost-effective way for the department to administer 4

8 the process for multiple proponents, allow consideration of all proposals at the one time, and provided for the necessary consideration of location-specific issues as part of the decisionmaking criteria. Public notices The chief executive published a notice on 30 May The notice stated: Intention to sell 5000 ML from the Surat management area Intention to sell 2000 ML from the Surat East management area Intention to sell 200 ML from the Surat North management area That these volumes would be made available by public tender. The public notice also provided information about: the location and quantity of water available the availability of the sale notice how to obtain copies of relevant documents times for public information sessions where to lodge tenders contact details for enquiries closing date for lodgement of tenders (5pm, 26 July 2013). Tender and supporting documents The department prepared a tender document to support the release process which was made available on the department s website and at the department s offices in Toowoomba. The document provided information to assist proponents in complying with the requirements and conditions of the tender process including how to meet the criteria for assessing and evaluation tenders. Included in the tender document was: An overview of the release process Summary explaining the assessment and evaluation of tenders Questions and answers about the sale of unallocated water Tender forms Tender conditions and evaluation criteria A sample water licence. Tender conditions The conditions for a person or entity to participate in a competitive process are outlined in the Water Regulation 2002, section 5E which state a person making a tender must: tender in accordance with the requirements under the GAB WRP, GAB ROP and the sale notice be eligible to hold a water entitlement to which the water is to be granted complete and lodge the required forms under the sale notice for taking part in the tender within the period stated in the sale notice. 5

9 Eligibility to hold a water licence To be eligible to hold a water licence, the tenderer must be an owner of land (or lessee) as defined under section 203 of the Water Act or an entity prescribed under section 206(4) of the Water Act. Evaluation criteria The criteria for evaluating tenders are stated in the Water Act, Water Regulation, GAB WRP and GAB ROP. The evaluation criteria were detailed in the tender documents along with explanatory notes. All tenders were assessed against the following broad criteria: Efficiency of proposed use Availability of an alternative water supply The impact the proposed take would have on flows to springs, base flow to watercourses, artesian water pressure and subartesian water levels Impact the proposed take will have on existing water entitlements Intention to use the water The topography is suitable for irrigation. How tenderers were required to address these criteria is explained in table 2. 6

10 Table 2: Evaluation criteria Criteria Efficiency of proposed use of the current and proposed use of water. Availability of an alternative water supply for the purpose for which the water is required. The impact the proposed take would have on flows to springs, base flow to water courses, artesian water pressure and sub artesian water levels. Impact the proposed taking of, or interfering with, the water may have on existing water entitlements and other authorities to take or interfere with water. Addressing the criteria Tenderers were required to include a statement that describes the overall intention for the proposed water resource development Tenderers were required to describe whether there are actual or potential alternative water supplies available and identify the opportunities or barriers to the use of those supplies. For these criteria tenderers were required to provide three exact location(s) in order of preference to enable the department to determine the maximum volume that could be granted for a tender at their preferred location. If the proposed take was from an existing bore, tenderers were also required to provide the registered number of that bore. Intention to use the water, including for a purpose that would not be eligible for a grant of water from the state reserve. The topography, including the slope of the land, is suitable for irrigation Tenderers were required to include a map of the tenderers development plan including location and details of the infrastructure for taking and storing water, the proposed timeframe and where possible evidence of an existing commitment to the development or expansion. For tenderers who proposed to use the water for irrigation they were required to include a map showing, topographic features, attributes of the soil and the location of the proposed water resource development and existing water resource development The tenderer was also required to provide a statement that identifies the area in hectares that is potentially suitable and available for irrigation. 7

11 Assessment panel All tenders were reviewed by two panels, the evaluation panel and the technical panel. The evaluation panel provided guidance and oversight to the tender process, while the technical panel assessed the tender documents based on the evaluation criteria. Evaluation panel Director, Water Services Support Service Delivery, Operations Support o Director for statewide unallocated water release processes o Detailed knowledge of the water resource planning framework and statewide operational delivery of the unallocated water release program o Director responsible for water billing invoices and business input to water management systems Manager, South, Water Services, Service Delivery o Operations Manager for Murray Darling Basin catchments o Detailed knowledge of the management of water entitlements and associated access to water Team Leader groundwater, Water Policy, Policy Program and Support o Responsibility for the GAB WRP o Experience in water resource planning and groundwater systems o Experience in plant and animal water consumption and impacts of saline and sodic groundwaters on soils and water budgets Technical panel Principal Project Officer, Central Water Services, Service Delivery o Responsible for assessment of potential groundwater impacts by major (e.g. mining) projects o Detailed knowledge of groundwater systems and previous experience in assessments relating to Great Artesian Basin aquifers Senior Project Officer, South Water Services, Service Delivery o Member of the statewide Water Management Operations Forum o South region senior leader for water entitlement dealings o Extensive knowledge and experience in assessing and deciding applications under the GAB WRP Senior Policy Officer, Water Services Support, Service Delivery Senior Technical Officer, South Water Services, Service Delivery o Detailed knowledge of GAB ROP assessment processes o Specialist in groundwater assessment and planning Natural Resource Officer, Coal Seam Gas Engagement and Compliance, Policy Program and Support o Specialist in groundwater assessment and planning Probity advice An external auditor (Argus Probity Auditors and Advisors Pty Ltd) was engaged to provide specialist advice during the assessment process. Those directly involved in the assessment received an induction from the probity auditor on the probity principles prior to the assessment of tenders. Any concerns about maintaining the integrity of the evaluation process of related issues were raised with the probity auditor when necessary. 8

12 The assessment panel specifically sought advice from the probity auditor on the following matters throughout the process: what information could be made publicly available at particular stages of the process and approval of the media protocol providing tenderers an opportunity to ensure that their tender conforms with the tender conditions seeking additional information from tenderers whether tenderers whose bid was below the should (and could) be provided with an opportunity to submit a revised bid. All officers involved in the assessment process were required to identify any potential conflicts of interest prior to reviewing the tenders. No conflicts of interest were identified by any of the assessment panel or evaluation panel members. The probity auditor has endorsed the assessment of tenders for the general reserve of unallocated water in the Great Artesian Basin. Opening of tenders The tender conditions required tendered documents (tenders) to be submitted in a sealed envelope and delivered to the department via registered post. Once delivered to the department s Brisbane office, they were placed in a locked box. Tenders were due by 5pm, 26 July The department was notified on the due date that a number of tenders would be received after the closing date due to the remote location of some tenderers. The chief executive approved the acceptance of late tenders. The box was opened by a member of the evaluation panel in the presence of a Commissioner for Declarations on 5 August Each tender was assigned a number in the order it was opened, and tenderer s names, management area, management unit, bid volume, time opened and number of pages were recorded. The tenders were electronically scanned and hardcopies and electronic copies were either hand delivered or sent via secure post to the evaluation panel and the technical panel. A total of 15 tenders were received five in the Surat, three in the Surat North and seven in the Surat East management areas. Assessment of tenders Conforming tenders Each tender was checked against a list of conditions required to be deemed a conforming tender, namely: Tender form and Form A have been signed, witnessed, dated and included the tenderer s name and address If the tenderer is a corporation, has affixed its common seal and provided a copy of its certificate of incorporation Tenderer is an owner of land, lessee or an entity Tenderer has provided a statement addressing the evaluation criteria 9

13 Tenderer had provided consistent minimum and maximum volumes in megalitres on both the Tender form and Form A. Six tenders were considered non-conforming due to missing or incorrect information. Table 3 provides a summary of the missing information. Table 3: Missing information Missing information Number of tenders Details and signatures of all registered owners/lessees on the Tender Form or Form A 3 Tender Form missing 1 Certificate of incorporation not included 2 Total bid volumes and price ranges The total volume of water that was bid for by tenderers was 1555 ML. The tender bid prices ranged from $800 per ML to $6000 per ML, with two bids not reaching the. Assessment against the evaluation criteria Members of the assessment panel conducted independent preliminary assessments of each tender against the evaluation criteria detailed in the tender documents, and identified any additional information that would be required to complete the assessment of the tenders. The assessment panel members collated their independent assessments and determined what additional information would need to be sought from tenderers to address or clarify responses to the evaluation criteria. The assessment panel conferred following the receipt of additional information and unanimously provided recommendations to the chief executive. Requests for additional information In accordance with clause 4.17 of the tender document, further information can be sought from tenderers. Eleven tenderers were sent instructions to submit details required to ensure their tender conformed with the tender conditions and were asked to provide additional information to assist in the assessment of the tender against the evaluation criteria where required. Letters requesting further information were sent out to eleven tenderers on 6 September 2013 with a deadline of 23 September 2013 to supply the information. A response was received from all eleven tenderers by the required date. Following the requests for additional information, tenderers responses were checked to confirm all aspects 10

14 of the tender conformed to the tender conditions and any additional information regarding the evaluation criteria was incorporated with the assessment against the evaluation criteria. A summary of the additional information required is provided in table 4 below. 11

15 Table 4: Summary of additional information required Requested information Number of tenders Tender document requirements Signature of all owners of land need to sign the tender form and Form A 2 Identify lot on plan numbers for all adjoining properties for the land on which water will be used. 3 Certificate of incorporation is required 1 Confirmation of the land to which the water is proposed to be used and taken 1 Provide tender document 1 Clarification on the latitude and longitude of the location of the bores 2 Confirmation if the project proposed in the tender has been declared project of regional significance for the purpose of the GAB WRP 1 Asked to revised the minimum volume 1 Evaluation criteria requirements The need for efficiency of current and proposed use of water. Provide further information about the calculations used to determine the amount of water that would be required for the proposed development 2 Timing of the proposed development and details of staged development if relevant. 1 Clarify the amount of water that is required for the proposal 1 12

16 Availability of an alternative water supply for the purpose for which the water is required Further information on the consideration of alternative water supplies 2 Intention to use the water Further information on the timing of the proposed development including proposed start and completion dates 1 Provide evidence of the existing development 1 Provide a map or design drawing outlining the proposed development including location and specific details for taking and storing water 1 Revised bid prices The two tenderers with bid prices below the were given an opportunity to make their best and final offer. Both tenderers provided revised bid prices that were above the. Deciding successful tenders The chief executive decided whether each tender was successful or unsuccessful after considering the tenders and recommendations of the assessment panel. Tenders that met the criteria and included bid prices that were at least the were recommended to the chief executive as successful tenders. The assessment panel recommended to the chief executive that twelve tenders be offered a water licence. Offers to tenderers Following the assessment there were 12 successful tenderers. The successful tenderers were sent a letter explaining the offer on the 6 January This letter also included a draft water licence and an acceptance form. Of the 12 offers sent, 11 accepted the offer and paid the deposit and the remaining account by the required due date. One tenderer declined the offer. A summary of the assessment of each tender and the outcome for each tender is provided in Table 5. 13

17 Table 5: Summary of assessments and outcomes for each tender Tender reference number Management area/unit Minimum and maximum bid volumes ML Bid price at least Conforming tender Evaluation criteria Outcome 1 Surat East Yes Yes Criteria addressed Successful tender 150 ML water licence offered and accepted 2 Surat North Yes Yes Criteria addressed Successful tender 60 ML water licence offered and accepted 3 Surat Yes Yes Criteria not addressed Availability of an alternative water supply for the purpose for which the water is required. Unsuccessful tender alternative water supply is available for the tenderer 4 Surat Yes Yes Criteria not addressed proposed development was declared a project of regional significance and eligible for state reserve Unsuccessful tender project eligible for state reserve 5 Surat East Yes Yes Criteria not addressed Availability of an alternative water supply for the purpose for which the water is required. Unsuccessful tender alternative water supply is available for the tenderer 14

18 Tender reference number Management area/unit Minimum and maximum bid volumes ML Bid price at least Conforming tender Evaluation criteria Outcome 6 Surat East Revised volume Yes Yes Criteria not addressed impact the proposed taking of water may have on existing water entitlement Revised volume met this criteria Successful tender 260 ML water licence offered and accepted 7 Surat Revised bid provided was above the reserve price Yes Criteria addressed Successful tender 50 ML water licence offered and accepted 8 Surat East Yes Yes Criteria addressed Successful tender 50 ML water licence offered and accepted 9 Surat East Yes Yes Criteria addressed Successful tender 25 ML water licence offered and accepted 10 Surat East Yes Yes Criteria addressed Successful tender 20 ML water licence offered and accepted 15

19 Tender reference number Management area/unit Minimum and maximum bid volumes ML Bid price at least Conforming tender Evaluation criteria Outcome 11 Surat Revised bid provided was above the reserve price Yes Criteria addressed Successful tender 50 ML water licence offered and accepted 12 Surat Yes Yes Criteria addressed Successful tender 50 ML water licence offered and accepted 13 Surat East Yes Yes Criteria addressed Successful tender 50 ML water licence offered. Offer was declined 14 Surat North Yes Yes Criteria addressed Successful tender 10 ML water licence offered and accepted 15 Surat North Yes Yes Criteria addressed Successful tender 10 ML water licence offered and accepted 16

20 Granting of water licences Following receipt of payment and processing of licensing approvals, water licences were granted after payment was received from the tenderers. Licensees were sent a copy of the water licence with a cover letter and decision notice about the licence decision. The total paid by successful tenderers for water licences from the general reserve of unallocated water in the Surat, Surat East and Surat North management areas was $952,500 of which the department retains eight per cent (or $76,200). The remainder of the money received from the sale of these water licences is held by Queensland Treasury and Trade. A total of 785 ML has been allocated from the general reserve of unallocated water in the Surat, Surat East and Surat North management areas of the Great Artesian Basin. The volume remaining in reserve for each management area is shown in Table 6. Table 6: Amount of water remaining in general reserve in the Surat, Surat East and Surat North management areas. Management unit Surat 6 Surat 7 Surat East 3 Surat East 4 Surat North 2 Surat North 3 Total remaining 2800 ML 2000 ML 495 ML 1000 ML 20 ML 100 ML Details of the successful tenders are provided in table 1. 17

21 Appendix 1: Map of the Surat, Surat North and Surat East management areas of the Great Artesian Basin 18

22 Appendix 2: Public notice 19

23 Appendix 3: Sale notice 20