Company running Wellington wastewater treatment plants failed basic asset management - report

10:15 am on 4 February 2022

Despite multiple failures - including untreated sewage polluting a popular swimming beach - the company running Wellington's four wastewater treatment plants is keeping its multi-million dollar contract for now.

Moa Point Wastewater Treatment Plant

Moa Point wastewater plant - one of the facilities operated by Veolia. Photo: Wellington Water

An independent report released today has found the French-owned multinational Veolia failed to carry out basic asset management, including regular maintenance.

Wellington Water - which is jointly owned by the region's councils - commissioned the review in October 2021 after issuing 10 warnings, infringement, and abatement notices to the company Veolia over the previous 18 months.

It was a member of the public who alerted Wellington Water to a contaminated sludge spill in Porirua's Titahi Bay last August after Veolia failed to notify it.

The independent review found the breaches and non-compliances were "avoidable".

"These were due to one or more of: human error; lack of resources; poor judgement; inadequate procedures; insufficient management oversight; or absence of planning."

The problems were not due to a lack of money, the review stated.

"There were no issues raised in relation to insufficient funds, or that the tenders had been bid at a price that was proving difficult for Veolia to sustain."

The French-owned company, which has operated Moa Point and Western wastewater treatments plants since 2004, was awarded a 10-year contract to run all four plants in 2019.

Veolia's performance had "adversely affected the trust and confidence of Client Councils, iwi, stakeholders and community groups in Wellington Water".

There was now a lack of trust between key personnel from both sides, they wrote.

For Veolia's part, its staff "viewed their treatment by Wellington Water as that of a 'master-slave relationship' and felt that client power dynamics may have impacted adversely on Veolia's performance".

Veolia staff felt there have been too many reviews, taking them away from their operational delivery functions.

"Wellington Water has at times exhibited a blame approach rather than jointly problem-solving."

However, the reviewers concluded that terminating the contract and finding a replacement - either by going back to the market or bringing the contract in-house - would take too long, with no guarantee it would "run any better than the poor implementation of the current contract".

"Continuing with Veolia as the current operator on an improved performance basis, presented the lowest risk with the ability to achieve the aspirational goals."

Wellington Water chief executive Colin Crampton said it would continue its $17 million-a-year contract with Veolia, on the condition it overhauled its operations of the plants.

He accepted Wellington Water was partly to blame, in that it should have done a better job of managing the contractual relationship.

The report criticised the blurred lines of responsibility, poor communication, and unclear direction from Wellington Water.

"Crisis will happen and dysfunctional organisational cultures will be exposed. The leadership of both organisations must work together rather than score points or deflect blame. They are there to serve the greater purpose of protecting public health and the environment."

Crampton said Wellington Water accepted the findings.

"We will work to enhance our capability, systems and processes to allow better management of Veolia."

A steering group made up of representatives from mana whenua, councils, Wellington Water, and Veolia has been set up to oversee implementation of the five key recommendations in the report.

These include ensuring Veolia has a fit-for-purpose structure to manage its contract, better performance management, asset management, and improved communications.