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NSW government sought advice on sale of Sydney Water

Leaked confidential documents show the NSW government sought advice on a possible sale of Sydney Water as it looked to fund infrastructure projects.

The government looked for feedback on the viability of Sydney Water as it sought to upgrade water infrastructure in the city's west, the documents, seen by AAP, reveal.

"The shareholders have shown a preference for maintaining or increasing returns to government and asset recycling," according to a board level briefing note generated by the utility.

Asset recycling is the sale of public assets to return cash to the state.

The report, prepared for the government by Sydney Water in February 2021 when Premier Dominic Perrottet was treasurer, outlines five options for Sydney's water body, including a full sale or partial sale as well as managing the assets as they are, or introducing developer charges.

The revelation comes as privatisation firms as a key NSW election issue, despite both parties ruling out the sale of public assets in the next term of government.

Last month, the premier dismissed suggestions he wanted to sell the state's water body, saying there were "no plans" to do so.

Labor Leader Chris Minns has attacked him over the stance, saying his opponent has been an advocate for asset recycling and privatisation his entire professional career.

Separate documents show the government also commissioned Clatyon Utz to provide advice on a water treatment plant planned to open in western Sydney in 2026.

The report, produced in March 2021 by the law firm, also proposes a series of different options for the Kemps Creek plant.

A contract to construct and manage the wastewater facility has since been awarded to a consortium of companies led by Chinese-owned Trility.

Owned by Beijing Enterprises Water Group, Trility was given a 10-year licence to operate the plant last year.

A spokeswoman for Water Minister Kevin Anderson reiterated the premier's comments that the coalition had no plans to privatise Sydney Water or its water recycling facility at Kemps Creek.

"Labor should stop lying to the people of NSW," she said.

"The Upper South Creek Water Recycling Centre will be owned and controlled by Sydney Water."

The spokeswoman said Trility's operating agreement was only for five years, with a possible five year extension - after which it would become a Sydney Water asset.

"This is for an asset that we expect to operate for well over 50 years."

AAP has contacted the office of the premier for comment.