Wellington’s sludge plant faces ‘ball park’ 20% cost blowout

Friday, 8 August 2025

Wellington’s $400m sewage sludge treatment plant has seen its budget surge by “a ball park” 20%, adding around $80 million to the original estimate, The Post understands.

The blowout was revealed to Wellington City councillors in a public-excluded session last week. Further details are expected on August 14, but it’s not clear when and if those will be made public.

It’s understood council officials didn’t give elected members a breakdown of the reasons behind the overspend, or explain why the information was being drip fed.

In a statement, the council wouldn’t confirm the estimated 20% blowout, but said staff had identified several key factors “driving the rising costs of the project”.

These include a later-than-expected practical completion date, design changes, previously unaccounted historical costs, and a reassessment of risks related to the plant’s commissioning process.

The overrun follows a nearly $150m jump in the cost of earthquake-strengthening and redeveloping the Town Hall.

And in June, The Post revealed the council’s debt has sailed beyond $1.5 billion with the city’s next mayor and council predicted to inherit a ledger book more than $2b in the red. Meanwhile, a rates increase of 12% will hit the average ratepayer to the tune of $632 a year.

A quarterly report on significant projects, published in June, shows the plant had a “red” health status and a forecast budget of $428m.

“Project has moved to RED while action is taken to decrease pressure on contingency funds,” the report said. “It is still forecast to complete within the available funding amount,” the report says.

It also noted several challenges. A final design delivery by Beca was delayed to May 2025 and key milestones were lagging behind the overall project requirements. A comprehensive review of all critical deadlines was under way.

The report also pointed to a dispute over a request by contractors McConnell Dowell and HEB Construction to extend the project deadline by 69 days. The report indicates the independent expert overseeing the project had rejected the request and the project board was considering a negotiation strategy.

The project, which soared in cost from an estimated $200m in 2021, is to be funded through a new levy on ratepayers.

It aims to prevent repeats of the “poo taxi” crisis of 2020, when a key pipeline burst and untreated waste had to be trucked across Wellington.

The Moa Point facility will dehydrate sewage sludge and use bacteria in giant digesters to break it down, transforming the waste into almost odourless pellets suitable for reuse in gardens or as fuel.

The new technology would replace the outdated process of mixing sludge with rubbish for landfill disposal.

It will also generate natural gas as a by-product, which will be used to power its operations.

In a statement, the council confirmed a “preliminary briefing about the challenges faced by the team building the new Te Whare Wai Para Nuku sludge minimisation facility currently under construction at Moa Point”.

It said the plant was being built to a $428m budget for completion.

“While staff are still interrogating the situation, there were several key themes emerging that are driving increased costs to complete the project.

“These include a later practical completion date than anticipated, changes in design, identification of historical costs which weren’t originally included, and re-assessment of risks with the pathway and process for commissioning the plant.”

The statement said a more detailed report on cost and funding implications would be outlined to elected members in next week’s briefing.

The matter would also be considered at the council’s long-term plan finance and performance committee on August, it said.

Mayoral candidate Andrew Little later released a statement saying stronger oversight of council projects was needed.

“Coming off the back of the Town Hall blowout, this is yet another example of a major capital project that has seen rapid escalation in costs and a lack of transparency to elected members or the public as costs run away.”

Little said he was committed to establishing an independent capital advisory group to monitor all major council projects.

“This group will be made up of construction, engineering and project management professionals tasked with making sure project costs are realistic, projects are well-managed and cost escalations are signalled early to limit the risk of blowouts.

“The mayor and councillors will approve appointments and have full visibility of reporting, so cost overruns are flagged early rather than being left until it’s too late to do anything about it.”