The tender to build a 3000 megalitre off-river water storage dam near the Tuross River has been awarded.
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Haslin Construction will take control of the $130m water security project that is jointly funded with the Australian Government committing $51.2m, the NSW Government investing $25.6m, and the Eurobodalla Shire Council contributing $58.2m.
A spokesperson from the Department of Planning and Environment said the tender meant the Shire was "one step closer" to having a new dam.
"The dam will be 370 metres long, 39 metres high, 200 metres wide, and will be located on a tributary of the Tuross River," they said.
"It will include a spillway to allow it to release water from heavy rainfall events back into the river.
"Work is nearing completion on a new pump station that will transfer up to 26 megalitres of water a day from the Tuross River during times of high flow, along with six megalitres from an existing bore field, into the storage dam."
The new pump station will be finished by September, and the dam is expected to be completed in 2024.
"This project will significantly increase water for agriculture and town water supply, particularly during droughts and periods of high demand like summer," Federal Minister for Infrastructure, Catherine King, said.
"It's a game-changer, with the project expected to deliver an extra 581 megalitres of water every year for downstream irrigators and beef, dairy and the environment during low river flows.
"It is a great example of the Australian Government supporting a stronger water future for regional NSW by increasing water reliability, boosting primary industry production, and helping to drought-proof local communities."
NSW Minister for Lands and Water, Kevin Anderson, said the tender was a "major milestone" for a "critical water infrastructure project".
"Haslin Constructions will begin early works in mid-August to upgrade the Eurobodalla Road intersection followed by clearing the site from late August," he said.
"The real action starts when the builder gets stuck into building the new storage dam in October."
Eden-Monaro MP Kristy McBain said it was "fantastic" to see the dam becoming a reality.
"I campaigned for the Eurobodalla Southern Water Storage project as Member for Eden-Monaro, and prior to that as Deputy Chair of the Canberra Region Joint Organisation," she said.
"Adequate water storage is so important to our South Coast communities, and I've no doubt the increased water capacity will make a huge difference for many decades to come."
Eurobodalla Shire Mayor Mat Hatcher said the new dam would complement the existing Deep Creek Dam in Batemans Bay.
"The project showcases the collaborative working relationship Council has with the Australian and NSW governments," he said.
"Our partnership with them has enabled us to push this project over the line, which is a huge win for long-term water security for the Shire.
"We've been championing it since 2016, and I'm thrilled that we are now getting on with the job."