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The council yesterday ordered staff to complete an open tendering process for construction of an up to $3.5million, 8700cum reserve reservoir at Reservoir Rd.
The additional treated water the reservoir would hold would be just under an average day's supply, council water services and waste manager Martin Pacey said.
Heavy rain late last year led to a water shortage, after turbid water entered the treatment plant three times dirtier than ever before.
The plan to build the additional treated water reservoir was subsequently brought forward from 2022-23 to this financial year, to ensure the supply was more resilient.
In council project manager Joshua Rendell's report to the council, he noted the tender would be due to be awarded before Christmas and construction of the reservoir was anticipated to take from early February to December next year.
The Oamaru supply serves users from Oamaru south to Moeraki.