UPDATE: THE builders and operators of the Wonthaggi desalination plant are asking for a taxpayer loan of more than $1 billion.
The request follows construction delays caused by industrial disagreements and bad weather.
The desal consortium, AquaSure, is seeking a government loan of $1.3 billion to refinance its debt, a one-year extension of the project deadline and hundreds of millions of dollars in payments that were only due to begin once the plant began operating, Fairfax reports.
They claim construction of the plant, which was due to be completed by June 30, has been setback by exceptional climatic conditions in Victoria and tense industrial relations.
The Victorian government says it will vigorously fight claims of more than a billion dollars in compensation by Wonthaggi desalination plant operators to cover construction delays.
Water Minister Peter Walsh said AquaSure had not made an approach for a formal contract variation.
"The only proposal they have presented was in principle and without prejudice, which we have rejected as it would not reduce the overall cost impact on water customers bills," Mr Walsh said in a statement.
Mr Walsh said AquaSure had lodged compensation claims for a total 290 days of lost time, due to industrial action and bad weather.
"AquaSure has not yet attached a value to those claims, however we believe those claims have not been substantiated against the project deed and we will defend them vigorously," he said.
The unions have disputed AquaSure's claims with the Electrical Trades Union pointing out its members had gone on strike for one day in three years.
The Construction, Forestry, Mining and Energy Union, responsible for most of the industrial action at the plant, says its members have gone on strike for about 10 days.
