Liverpool Plains Shire Council is hopeful construction will start on the Quipolly Water Project before Christmas.
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The $28.3 million-dollar project will go to tender when it passes the "final hurdle" - approval from the Department of Industry.
"We're ready to go to tender other than waiting on the section 60 approval the state government gives you for drinking water supplies to make sure they're happy with the scope of the project," shire mayor Andrew Hope said.
"It's the final hurdle. We're expecting it on any tick of the clock.
"Our aim is still to go to tender late this month if everything goes to plan."
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Cr Hope said it would be a design and construct tender, with two or three companies to vie for the contract.
"We would like the tender to be awarded this year and construction to start before Christmas would be ideal," he said.
"It will be 12-18 months for the build."
The new treatment plant is key to solving ongoing water quality issues in Werris Creek, which sources its water from the dam.
Cr Hope said it was the "biggest project ever" for the council, which will contribute up to $8.3 million to the project. The federal and state governments contributed $10 million each.
"It's about water security, it's about the quality of water; it will improve the amount of water we can deliver to the town," Cr Hope said.
Werris Creek residents are on level 1 water restrictions because the current treatment plant is struggling to keep up.
When the new plant is constructed, the council will have the ability to supply water to Quirindi in times of need.
