Welsh Water  is progressing the pre-market engagement for its £500 million Cwm Taf Water Supply Project (Cwm Taf Project) to provide long-term water supply resilience to Cardiff, Newport and several smaller towns located within the Merthyr Valley.

The water company will utilise a Competitively Appointed Provider (CAP) to deliver the project whichwill be procured using Ofwat’s new Direct Procurement for Customers (DPC) approach.

The major construction project will be delivered on a Design, Build and Finance (DBF) basis and will include:

• Design and Build including testing, and commissioning of the works
• Financing of the activities.

The formal designation of the DPC scheme by Ofwat is scheduled for publication before the end of the year.

Welsh Water is continuing to test market interest for the project before publication of the contract notice, which is currently expected in September 2023.

Subject to Ofwat approval, the CAP will undertake the Design, Build and Financing (DBF) of the following:

• new Water Treatment Works near Merthyr Tydfil designed for 180Ml/day. (N.B.The reduction in capacity from the previously stated 225Ml/day has arisen as a result of DCC’s longer term review of future network demand)
• new 90Ml treated water storage tank (previously 150Ml)
• associated raw and treated water pipelines, and existing network reconfigurations. The raw water pipelines will carry water from existing reservoirs in the Brecon Beacons National Park to the new water treatment works. The new treated water pipelines will carry treated water from the new water treatment works to the existing network and on to customers
• new and upgraded pumping stations to boost water pressures 

The overall scheme strategy is to ensure protection of the supply of safe drinking water to around 400,000 people across the DCC South-East Wales Conjunctive Use System (SEWCUS), and to meet future 2050 Water Resource Management Plan (WRMP) outputs.

Welsh Water has already initiated the first stage of the planning approval process for the project, launching the pre-application consultation in February 2022.

Current estimate for construction of the 180Mld water treatment works, tank, pipeline, and associated works is around £500 million (including risk and inflation).

Early in the process the water company opted to use the Mutual Investment Model agreement.

The utility is continuing to prepare the Outline Business Case required by Ofwat prior to commencement of the formal procurement process.

Welsh Water said it is “minded to include an exclusivity clause” within the procurement documentation stipulating that the main EPC contractor and designer can only be part of one consortium i.e. they cannot submit or be part of more than one bid.

The water company has published an updated indicative timetable as follows:

• Market engagement: 2022 - September 2023
• Commence pre application planning process: Q1 2023
• Issue Contract Notice and Pre-Qualification Questionnaire (PQQ): September 2023
• Issue Invitation to Tender (ITT): Q1 2024
• ITT period: Q1 2024 – Q2 2025
• Notify preferred bidder and commence standstill: Q3 2025
• Contract award: Q1 2026

Welsh Water has issued a Periodic Indicative Notice (PIN) inviting interested organisations to register their interest and for access to a dedicated DPC Market Engagement Portal which includes a number of Cwm Taf DPC documents that have been issued since the release of the first PIN in April 2021.

The dedicated DPC Market Engagement Portal will henceforth be used for all communications, market updates, and any other DPC documentation before the Contract Notice is issued.

Welsh Water wants to hear from organisations with experience of financing construction schemes for DPC, PFI or PPP or like projects and experience of construction of water treatment works with associated storage tank and water mains laying capability,

The utility intends to utilise the negotiated procedure with prior call for competition and intends to award the entire scope to a single CAP.

Click here to access the Periodic Indicative Notice

Want to know more about Welsh Water's AMP7 investment plans? Winning new business with the water companies in England and Wales in AMP7 and AMP8 between now and 2030?

Our report Complete AMP7 Contracts Tier 1 Alliances and Tier 1 Contractors April 2020 - 2025 contains details of the companies, key investment drivers, the alliances, the contracts they’re already working on in the UK water sector, together with hundreds of key named contacts. Click here for more information and details of how to order.