Jamie Sinclair, chief executive of Watercare.
With a $3.4 billion debt capital raise behind it, a bond programme in international markets and new governance in place, Watercare is looking ahead to getting on with the country’s biggest decade-long infrastructure programmes.
Watercare is now financially separate from owner Auckland Council, giving it the ability to borrow more to fund and smooth out the impact of a $13.8b spending programme over the next decade.
It is embarking on 13 programmes to replace ageing pipes and equipment and build new infrastructure for the city’s growth, especially on its fringes.
In July last year, Watercare completed New Zealand’s largest-ever corporate debt capital raise, securing $3.4b in committed bank debt facilities, followed by a further $400 million bond issuance.
A syndicate of major banks, including Westpac NZ, BNZ, Commonwealth Bank of Australia and Bank of China supported the transaction, following the Government’s Local Water Done Well legislation.
Watercare chief executive Jamie Sinclair says the financial transformation and new oversight by the Commerce Commission allow the company to deliver on its business plan.
With the foundations now in place, “this year for us is all about delivery” for the company, with an $18b asset base, he says.
Around 1000 different projects are being incorporated into the different programmes enabling a more co-ordinated and efficient approach to building.
“Moving from projects to programmes is probably one of the most significant changes we will be making as an organisation,” says Sinclair.
More severe weather - both rainfall and drought - and population growth is putting more pressure on existing infrastructure.
Watercare is spending on average $3.8m a day with around half that on upgrading its existing network and the remainder on new infrastructure.
“I think everybody would accept that we’ve got an infrastructure deficit in this country and certainly water is an example of that,” he says.
“A lot of our assets are coming towards the end of their lives. So it’s about not ignoring what we have, it’s getting out and showing it a bit of love.”
Watercare’s network stretches from Wellsford to Tuakau, serving around 1.7 million people now. It forecasts population will grow by 215,000 in the next decade.
Its flagship project, the $1.6b Central Interceptor, (CI) is nearing completion with the two parts of it connected around the middle of the year.
Sinclair says although it doesn’t attract the same headlines as projects such as the City Rail Link or the NZ International Convention Centre, it will be transformational for the city. It has already made a difference.
At the moment, we’ve got quite a large number of private plan changes and fast track applications which will affect the way in which development will happen and we need to be responsive to that.
The southern section of the main CI tunnel went live in February 2025 and Watercare say it has so far prevented spilling of an estimated 450,000 m3 of combined wastewater or stormwater.
That’s the equivalent volume of a 20-storey (64m) building covering Eden Park.
The two halves of the 16.2km tunnel from Māngere to Point Erin in Herne Bay will be joined around July and go live. But Sinclair points out that it’s part of a much wider programme of network improvements.
Importantly, the CI enables the $876 million Waitematā Water Quality Improvement Programme, a joint initiative between Watercare and Auckland Council to significantly reduce wastewater overflows and reduce the amount of stormwater entering the wastewater network in some of the oldest parts of the city, which includes Waterview and Pt Chevalier through to Herne Bay in the north, down to Lynfield and Hillsborough in the south.
And Sinclair says other programmes now underway or planned are in the same ballpark and even bigger.
“We have a suite of another 11 programmes that are equal to or greater in size or complexity to the CI, that’s the sort of scale we’re talking about.”
It is spending more than $1b on the upgrade of its Māngere treatment plant, which serves about 1.3 million people; $600m on its Rosedale plant on the North Shore, which will incorporate new solid waste during technology and process; and the cost of upgrading its Huia water supply infrastructure may well top $2b.
One of the big issues facing Watercare will be expanding water supply to meet growth. A desalination plant is a possibility.
A more co-ordinated approach will reduce the time it takes for big programmes to come on-stream. The CI will end up taking close to 20 years from concept to opening and Sinclair says more time dedicated to front-end planning will reduce the duration of future projects.
“Having that integrated programme will really help because then you can coordinate works a lot better. It’s being smarter with the procurement approach, getting a lot more done up front to help speed up construction.”
Working more closely with other bodies, such as Auckland Transport, will help avoid digging twice on local projects and cut the time the dreaded road cones are deployed.
While housing intensification policies by central government have been fluid, Watercare works on its own population projections. Because of that, it has had to warn developers and builders that connections can’t be currently guaranteed in some areas due to pressure on wastewater plants.
Sinclair says there is targeted work to improve responsiveness to the developers.
“In particular, it’s being clear about what our policy is, our approaches, so that they can have some confidence. We aren’t always going to be able to satisfy everybody in terms of being able to address development that is out of sequence with our plan.
“At the moment, we’ve got quite a large number of private plan changes and fast-track applications that will affect the way in which development will happen and we need to be responsive to that. So that does create a challenge because of the long-lived nature of our assets .”
Watercare has offered support to the owner and operator of Moa Point in Wellington, where a major failure resulted in sewage spilling into the sea. Sinclair says the incident has reminded people of the importance of infrastructure most don’t think too much about - until something goes wrong.
“People just assume it’s there and it works. We work really hard behind the scenes to make sure that it does always work 24/7. But the more people are aware of it, the more they have an understanding of what goes into maintaining and looking after these critical assets.”
Sinclair says his company was watching for fallout from the war in the Middle East.
Watercare gets chemicals from, and equipment shipped through the area, and its vehicle fleet is a big fuel-user.
‘’Any sort of pressure around that pricing is going to have an impact on us.’'
Watercare’s multi-year bond programme is now exposed to more global risk.
‘’There’s more variability, more uncertainty in the market, which has the potential to price in more risk - but we haven’t felt that yet.’’
Under its new governance structure, pricing is now regulated by the commission, which assesses and reports on its performance regularly.
“It’s a new mindset of transparency, which is really good,’’ says Sinclair. ‘’I think there’s an adjustment period.”
Like other regulated utilities, the commission sets a revenue cap through a series of rules around a return on capital or return on equity, he says.
“We just want to make sure that the settings are set up right at the beginning, because the cost to Auckland if we get it wrong is quite material.”
In its initial report last November, the commission said “existing key measures and targets that Watercare uses to inform its stakeholders show it generally meets or exceeds its performance targets”.
Noting wastewater overflows, it added: “In the coming year we expect to work with our co-regulators to ensure investment in reducing overflows delivers the best possible value to consumers and that Watercare demonstrates this in a way that we can all understand.”
Sinclair says there’ll be an 80% reduction in overflows within the catchment of the Central Interceptor and, although heavy rain can always mean stormwater enters the system, it’s something the 1400 staff are working hard to improve.
“I can see in the next few years you’ll see a really significant reduction in the environmental impacts caused by our network.”
Watercare will announce its prices for the coming year in May, after its 7.2% rise for current users in the past 12 months.
Serves 1.7 million Aucklanders
NZ’s largest water utility
Spending nearly $14b over 10 years
That’s $27m a week
18,000km of water and wastewater pipes
Average household spend last year: 0.89% on water services
Total revenue last year: $1.158b, with a surplus of $82m.
Watercare is a sponsor of the Herald’s Project Auckland report.